Mumbai:
Government has announced that the GST Council has decided to exempt GST(Goods and Service Tax) in the reinsurance deals of some of the major social security schemes like Prime Minister Fasal Bima Yojana(PMFBY), Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJY), Pradhan Mantri Jan Dhan Yojana(PMJDY), Varishta Pension Bima Yojana on the condition that the benefit of reduction in the premium on such Insurance schemes, must be passed on to the beneficiaries and the State and Central exchequers.
“ Insurers shall avoid any undue enrichment on this account. Insurers may note that if necessary benefit on account of reduction in premium is not passed on to the insured / Govt., suitable action against the Insurance Companies may be initiated with National Anti-Profiteering Authority under Section 171 of the CGST Act,’’ said a notification by IRDAI on Wednesday. .
GST Council in its 25th meeting held on Jan 18 has taken a decision to this effect for ease of living of senior citizens and proposals relating to insurance, specifically Pradhan Mantri Fasal Bima Yojana (PMFBY).
Earlier, Hashmukh Adhia, finance secretary, in his letter to Rajiv Kumar,secretary, financial services, has said that since for payment of premium for the exempted insurance schemes, substantial budgetary allocation is made by the government, it may be ensured that the insurance premia are reduced by insurance companies.
“This may be monitored by the Department and concerned nodal Ministry to avoid any undue enrichment to the Insurance Companies. If necessary benefit on account of reduction in premium is not passed on to the insured/ Govt, suitable action against the Insurance companies may be initiated with National Anti-Profiteering Authority under section 171 of the CGST Act,’’ said Adhia.
“I am directed to inform that the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been approved by the GST Council in its 25th meeting held on Jan 18,2018 on the condition that the benefit of reduction in the premium on such Insurance schemes, must be passed on to the beneficiaries and the State and Central exchequers,’’ said Adhia.
Considering the fact that no GST is payable on insurance premium of such schemes and the GST paid on the re-insurance is included in the cost of insurance premium charged by the Insurance Companies from the beneficiaries and also shared between the Centre and State Governments, the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been apporoved be the GST Council, explained Adhia.