As discussions on potential GST reforms unfold, senior citizens and those seeking relief on essential expenses may soon have something to look forward to. A proposal under consideration could make term insurance and health insurance policies more affordable, particularly for senior citizens and individuals purchasing medical coverage up to ₹5 lakh.
A group of state finance ministers has suggested the removal of GST on health insurance for senior citizens and a potential exemption for term insurance policies. If implemented, this could significantly reduce costs for those managing essential insurance expenses. The current 18% GST levied on insurance policies may be slashed, which would ease the burden on retirees and families looking to secure their future.
In contrast, to balance potential revenue losses, the government is considering increasing GST on luxury items like expensive watches and high-end shoes. Items such as footwear costing more than ₹15,000 and watches over ₹25,000 could see a GST increase from 18% to 28%. However, relief on everyday items is also on the horizon. Goods such as notebooks, bicycles under ₹10,000, and drinking water sold in 20+ litre containers might see a reduction in GST rates, making these everyday essentials more affordable.
Bihar Deputy Chief Minister Samrat Chaudhary, leading one of the two key ministerial panels, mentioned that these changes aim to strike a balance between easing the financial strain on citizens and ensuring the government continues to collect necessary revenues. The panels expect to generate around ₹22,000 crore through higher levies on luxury goods, which could help offset the tax relief provided for essential services.
Tamil Nadu’s Finance Minister Thangam Thennarasu has also voiced support for a reduced GST rate on health insurance, proposing a 5% levy without input tax credits. While discussions are ongoing, these steps show a clear direction toward alleviating financial pressure for those prioritizing health and insurance coverage.
The final decisions, however, are pending further deliberations and will require approval from the GST Council. If these proposals are accepted, they could provide much-needed financial relief to senior citizens and families, making essential insurance products and everyday goods more accessible.
Several common-use items may see lower GST rates as part of the discussions currently underway. These include:
- Term insurance plans – particularly for senior citizens purchasing health insurance and medical coverage up to ₹5 lakh.
- Notebooks – currently taxed at 12%, these may see a reduction to make them more affordable.
- Bicycles – costing less than ₹10,000 could benefit from a lower GST rate.
- Drinking water in 20+ litre containers – could see a reduction from the current 18% GST.
- Aerated water – now taxed at 18%, might also be considered for a lower GST rate.
