GST Council moves closer to cutting GST on life and health insurance premiums
GST relief on health insurance: Council likely to consider 4 options
The Goods and Services Tax (GST) Council has reached broad consensus on reducing the GST rate on life and health insurance premiums from the current 18 percent. However, a final decision is expected to be taken during the next council meeting, according to media reports.
During the 54th GST Council Meeting, chaired by Union Finance Minister Nirmala Sitharaman and attended by state finance ministers, the Fitment Committee presented a report detailing the implications of the GST cut on these premiums. The committee, comprising officials from both the Centre and the states, analysed data and provided insights into how a rate cut could impact taxpayers.
Government lowers GST on health and life insurance
A source familiar with the matter said: “There has been broad consensus on a reduction in the GST rate for health and life insurance, but the specific modalities will be decided at the next council meeting.”
The move is expected to benefit millions of policyholders by reducing the overall cost of their insurance premiums. The rate cut comes as monthly GST revenues have been on a steady upward trend, creating scope for taxpayer-friendly initiatives. Gross monthly GST revenues have stabilised at around Rs 1.75 trillion, a significant jump from Rs 90,000 crore when GST was introduced in July 2017.
In the pre-GST era, insurance premiums were subject to service tax, which was absorbed into GST when the tax regime was rolled out. In the financial year 2023-24 (FY24), Rs 8,262.94 crore was collected through GST on health insurance premiums, with an additional Rs 1,484.36 crore from GST on health reinsurance premiums.
No decision on digital transactions
Meanwhile, Uttarakhand Finance Minister Premchand Aggarwal clarified that no decision was taken in the council meeting on tax on small digital transactions. The proposal to impose 18 per cent GST on payment aggregators for transactions below Rs 2,000 has been referred to the Fitment Committee for further consideration.
GST on helicopter services reduced
In addition, the council has decided to reduce GST on helicopter services for pilgrims and tourists from 18 per cent to 5 per cent. The Fitment Committee will also review the issue of GST on research and development activities in educational institutions.
Health insurer shares in the red
In the market, shares of major insurance companies such as Star Health, ICICI Lombard General Insurance and Go Digit General Insurance are in the red on concerns over the upcoming decision on GST rates on insurance premiums.
West Bengal Finance Minister Chandrima Bhattacharya had earlier raised the issue of insurance premium tax in the Group of Ministers (GoM) meeting on tariff rationalisation, leading to a referral to the Commission for further analysis.
(With input from the agency)
First publication: 09 Sep 2024 | 18:04 IST