Will GST Council Lower Tax Rates On Health And Life Insurance Premiums?

In its 54th meeting held on Monday, the GST Council reached a broad consensus on the need to reduce the Goods and Services Tax (GST) rate on health and life insurance premiums, which is currently set at 18%. However, the specifics of the reduction have been referred to the Group of Ministers (GoM) for further deliberation.

Further Discussions by Group of Ministers

The GoM on rate rationalisation, along with ministers from various states, will examine the proposal in greater detail. They are scheduled to meet in Goa on September 23 to discuss the issue thoroughly. The next GST Council meeting is planned for November, where final decisions on the reduction will be made. “There was broad consensus for GST on health and life insurance premiums to be reduced, but modalities will be decided in the next Council meeting,” a source revealed.

READ MORE: Controversial Islamic Preacher Zakir Naik Calls Suggests Indian Muslims How To Stop Passing Waqf Amendment Bill

Fitment Committee’s Role and Recent Meetings

The fitment committee, which includes officials from both state and central governments, had previously presented detailed figures on the potential reduction of GST rates. During the GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, these figures were reviewed but no final decision was made. In August, the reconstituted GoM on rate rationalisation had met for the first time and decided against altering the existing slabs in the indirect tax regime. Although the issue of reducing GST on insurance premiums was discussed, it remains under review by the fitment committee.

Previous Discussions and Political Reactions

On August 27, Sitharaman mentioned that both rate rationalisation and adjustments to GST slabs were being considered. She noted that discussions would be item-by-item, comparing current rates with the revenue-neutral rate. In the fiscal year 2023-24, the GST collection on health insurance premiums amounted to Rs 8,262.94 crore, while Rs 1,484.36 crore was collected from health reinsurance premiums.

Political Calls for GST Withdrawal

Several opposition leaders, including Rahul Gandhi, Leader of Opposition in the Lok Sabha, and Mamata Banerjee, Trinamool Congress chief, have called for the withdrawal of GST on life and health insurance premiums. Banerjee even wrote a letter to Union Finance Minister Nirmala Sitharaman requesting a rollback of the tax. Earlier on July 28, Union Minister of Road Transport and Highways Nitin Gadkari also wrote to Sitharaman, arguing that taxing insurance premiums amounted to taxing the “uncertainties of life.”

Sitharaman responded last month, noting that insurance premiums were taxed even before GST was introduced, and that GST revenues are shared between states and the Centre.

The debate over the GST rate on health and life insurance premiums continues, with further discussions scheduled and political pressure mounting. The outcome will be crucial for taxpayers and the insurance sector alike, as the GST Council and GoM work towards a resolution.

ALSO READ: Mpox In India: Centre Issues Safety Advisory To States, UTs