Next-Gen GST Reform: Health insurance, life insurance is tax-free

The 56th GST Council meeting decided to reduce the GST rate in two slabs of 5% and 18% by merging the rates of 12% and 28%. Union Finance Minister Nirmala Sitharaman announced on Wednesday, September 4, that GST rates on essential commodities, agricultural products, automobiles and electronic devices have been drastically reduced. The reduction in GST on essential commodities is expected to provide greater relief to the public.

It is worth mentioning that the next generation of GST reforms announced on Wednesday will bring relief to the citizens of the healthcare and insurance sector to a great extent. The earlier 18% GST has been replaced with complete tax free. 

These reforms allowed by the GST Council are expected to bring down the cost of essential medical supplies and health related financial services.

In addition, GST rates for several important medical items have been reduced from 12% to 5%. They include thermometers, medical grade oxygen, all diagnostic kits and reagents, glucometers and test strips, as well as corrective spectacles.

In case of essential commodities, daily household consumption items such as hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes, and shaving creams have fallen by 18% to 5% GST. Similarly, GST on butter, ghee, cheese, dairy products, pre-packaged namkeens, bhujia and mixtures utensils has been seen to come down from 12% to 5%.

Utensils, feeding bottles, baby napkins and clinical diapers have also been reduced to 5%. 

         GST has also been reduced in terms of providing relief to farmers and agriculture sector. Tractor tyres, different parts of tractors, specific agricultural machinery for cultivation, harvesting and harvesting have been reduced to 5% instead of the earlier 18,12% GST. Drip irrigation system, sprinklers, bio-pesticides and micronutrients have also been brought down to 5%.

There has also been a lot of relief to the automobile industry. GST rates on 1200 cc and 4000 mm of petrol & petrol hybrid, LPG and CNG cars have been reduced from 28% to 18%. Diesel & Diesel hybrid cars of 1500 cc and 4000mm, 3 Wheeled vehicles motorcycles below 350cc and below, and motor vehicles for transport of goods have been reduced to 18% instead of the earlier 28% GST.

         Maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, eraser and notebooks have now been made completely tax-free instead of the earlier 12 and 5% GST related to the education sector. Electronic devices like air conditioners, televisions (above 32", including LED & LCD TVs) monitors, projectors, dish washing machines have also been reduced to 18% instead of 28% GST.