 "GST relief on health insurance: Council likely to take up 4 options")
GST relief on health insurance: Council likely to take up 4 options
The Goods and Services Tax (GST) Council has reached a broad consensus on reducing the GST rate on life and health insurance premiums from the current 18 per cent, but a final decision is expected to be made in 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 reduction on these premiums. This committee, composed of officials from both the Centre and states, analysed data and provided insights into how a rate reduction might impact taxpayers.
Govt to reduce GST on health and life insurance
A source familiar with the matter said, “A broad consensus has been reached on GST rate reduction for health and life insurance, but the specific modalities will be decided in the next council meeting.”
This move is expected to benefit millions of policyholders by reducing the overall cost of their insurance premiums. The rate reduction comes as monthly GST collections have been on a steady upward trend, creating room for taxpayer-friendly initiatives. The gross monthly GST collections have stabilised at around Rs 1.75 trillion, a significant jump from Rs 90,000 crore when the GST was introduced in July 2017.
In the pre-GST era, insurance premiums were subject to service tax, which was subsumed 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 had been made in the council meeting regarding taxation on small digital transactions. The proposal to impose an 18 per cent GST on payment aggregators for transactions below Rs 2,000 has been referred to the Fitment Committee for further review.
GST on helicopter services reduced
Additionally, the council has decided to reduce the 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 insurance firms’ shares trading in red
On the market front, shares of major insurance companies like Star Health, ICICI Lombard General Insurance, and Go Digit General Insurance are trading in the red due to concerns over the impending decision on insurance premium GST rates.
West Bengal Finance Minister Chandrima Bhattacharya had earlier raised the issue of insurance premium taxation in the Group of Ministers (GoM) meeting on rate rationalisation, leading to its referral to the Fitment Committee for further analysis.
[With agency inputs]
First Published: Sep 09 2024 | 6:04 PM IS