Nirmala Sitharaman,Union Finance Minister
Currently, an 18 per cent GST is levied on all such group insurance policies.
Almost every organised employer provides cover for its workforce, so the cost of providing the coverage comes down, which should assist the spread of cover and the insurance industry itself, sources added.
New Delhi:The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers on Thursday has allowed employers to get Input Tax Credit on GST paid for employee insurance cover.
Currently, an 18 per cent GST is levied on all such group insurance policies.
Under the Goods and Services Tax law, GST is exempt on individuals buying life or health policies for themselves or their family.
However, when a business buys life or health cover for its employees, tax is charged on that cover, and until now the business could not claim ITC on it.
“This will make insurance cheaper for every employer to provide”, industry sources said.
Almost every organised employer provides cover for its workforce, so the cost of providing the coverage comes down, which should assist the spread of cover and the insurance industry itself, sources added.
The GST Council on Thursday approved scrapping the arrest powers of GST officers and raised the threshold to launch prosecution to Rs 5 crore from Rs 1 crore.
“The rate structure is settled, so the council has turned to how the tax works day to day,” the Finance Ministry said, adding that GST rate changes will now happen once a year.
On input tax credit claims, 57th GST Council decided to set up a Committee of Officers to examine how to protect a genuine buyer who holds a proper invoice, has received the goods, and has paid his supplier in full.
“The Committee of Officers will complete its study within three months, and an agenda will be placed before the next council meeting,” the ministry said.
The GST Council revoked GST officers’ arrest powers.
The threshold for prosecution goes up from Rs 1 crore to Rs 5 crore. The minimum punishment stands removed, and the punishment — whether fine, imprisonment, or both — is left to judicial discretion in every case, as per the council decision.
The general penalty, which applies where no specific penalty is provided, comes down from Rs 25,000 to Rs 10,000, the ministry said.