2024-09-10 22:43:34
New Delhi: There has been a broad consensus on reducing the GST rate on health and life insurance premiums from the current 18 percent. But, the final decision on this will be taken in the next meeting of the GST Council. Sources gave this information. The committee of tax officials of the Center and the states (Fitment Committee) to rationalize the tax rate presented a report before the GST Council on Monday. It contains data and analysis of GST reduction on life, health and reinsurance premiums. After participating in the meeting, Delhi Finance Minister Atishi confirmed this in a conversation with journalists. A source said, ‘There has been a broad consensus on reducing the GST rate on health and life insurance. But, its modalities will be decided in the next meeting of the Council.’
The 54th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and attended by state ministers, concluded on Monday evening. This is the highest body to take decisions on GST-related matters. Most states are in favour of reducing insurance premium rates. The reason is that with the increase in monthly GST collection, there is scope for taking taxpayer-friendly measures. If GST rates are reduced, it will be beneficial for crores of policyholders. This will reduce the premium amount.
Earlier service tax was levied on insurance premium
Before the advent of GST, service tax was levied on insurance premium. When GST was implemented in 2017, service tax was included in the GST system.
In the financial year 2023-24, the Center and the states collected Rs 8,262.94 crore through GST on health insurance premium. While Rs 1,484.36 crore was collected as GST on health reinsurance premium.
The issue of imposing tax on insurance premium was raised in Parliament
The issue of taxing insurance premium was raised during the discussion in Parliament. Opposition members had demanded exemption of health and life insurance premium from GST. Even Union Minister Nitin Gadkari had written a letter to Sitharaman on this issue.
West Bengal Finance Minister Chandrima Bhattacharya had raised the issue of insurance premium in a meeting of the Group of Ministers (GoM) on rationalisation of rates last month. The matter was then referred to the ‘fitment’ committee for further data analysis.