The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, ended with crucial decisions being deferred for further discussion. One of the key topics on the agenda—a proposed reduction in GST on life and health insurance premiums – will be postponed until the next session. While stakeholders eagerly awaited a resolution, the Council agreed that more technical deliberations are required before finalizing any decisions.
A major focus of the meeting was a proposal to lower the Goods and Services Tax (GST) on insurance premiums. However, the Council decided that some aspects still need to be ironed out. A Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, has been tasked with further review. Chaudhary confirmed that additional discussions would take place in January to address concerns related to the taxation of group, individual, and senior citizens’ insurance policies.
Premium Tax Exemption
While the GST Council has postponed a decision on rate cuts, progress has been made in other areas. Back in November, the GoM had reached an agreement to exempt insurance premiums for term life insurance policies from GST. This exemption, however, is just one part of a broader conversation on reforming the taxation of life and health insurance.
Health insurance
A Group of Ministers (GOM) set up by the Council under Chaudhary, in its meeting in November had agreed on exempting insurance premiums paid for term life insurance policies from GST.
Also premium paid by senior citizens towards health insurance cover has been proposed to be exempted from the tax.
Besides, premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh is proposed to be exempted from GST.
However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh
Impact on Revenue Generation
Another major discussion point was the rationalization of GST rates on nearly 150 items. This exercise, aimed at boosting revenue by approximately Rs 22,000 crore, is also still under consideration. The GST Council is expected to revisit this proposal after reviewing the finer details and ensuring a balanced approach that benefits both consumers and the government.
With these critical decisions postponed, the GST Council has ensured that all necessary technicalities and concerns are addressed before moving forward. The next meeting will likely bring clarity on these issues, shaping the future of insurance taxation and potentially delivering a substantial boost to government revenues.
