Union Finance Minister Nirmala Sitharaman

The issue of removal of 18 per cent GST can be decided by the GST Council. Several suggestions have come up and I shall take up with the GST Council,” Nirmala Sitharaman had said during her reply to the amendments of Finance Bill, 2024 in the Lok Sabha last week

The General Insurance Council, the official representative body of  all regulated general  insurance companies , had earlier suggested that GST on health insurance either should be brought down to 5 per cent without input tax credit (ITC) or 12 per cent with ITC

NEW DELHI: The GST Council, a constitutional body chaired by Union Finance Minister Nirmala Sitharaman, will meet on September 9.

“The 54th Meeting of GST Council will be held on 9th September, 2024 at New Delhi,” the Council said in a post on X.

The GST Council, comprising finance ministers of Centre and states, is the apex decision making body with regard to Goods and Services Tax (GST), which was rolled out on July 1, 2017.

Though the full agenda of the meeting is yet to be known , ministry of finance sources pointed out that the issue of 18 per cent GST on retail health insurance premium, which has been raised by politicians across the party lines, is top priority and a decision will be taken whether to remove it entirely or reduce it, in the meeting.

“Several suggestions have come up and I shall take up with the GST Council,” Sitharaman had said during her reply to the amendments of Finance Bill, 2024 in the Lok Sabha.

The matter was raised by the Opposition during debates on the Budget.

“The issue of removal of 18 per cent GST can be decided by the GST Council. Bringing an amendment here will not serve any purpose. First the GST council will decide, then only an amendment can be brought here,” she had said.

The General Insurance Council, the official representative body of  all regulated general  insurance companies , had earlier suggested that GST on health insurance either should be brought down to 5per cent without input credit tax (ITC) or 12 per cent with ITC.

GI Council had assured the government that if its suggestion are implemented, the general insurers will ensure that the policy holders are benefitted as they will reduce health insurance premiums, which has significantly risen after Covid-19 pandemic.

Sources also said, it is possible that GST Council as a special measure may remove GST for senior citizens who are facing problems in getting proper health covers.  

Sithraman, during the debate on the Lok Sabha, had asked the opposition to convince their states to propose removal of 18 per cent GST levied on life and health insurance premiums at the GST Council.

Those who are demanding removal of 18 per cent GST on premiums on life and medical insurance should first convince their finance ministers of respective states on this matter, she said.

The finance minister had highlighted that states had two-thirds share in GST Council and they were capable of taking a decision.

Though the issue  had came up in three previous GST Council meetings — 31st , 37th and 47th meeting, no decision has been taken.

About 73-74 per cent of GST collected under the head goes to states and they should have the heart to forgo this, she had said.

Out of the total GST collections of Rs 24,529 crore from Health Insurance in the last three years, she said, half of it, Rs. 12,264 crores, went straight to the states as SGST. It doesn’t even come to the Centre.

Apart from this, roughly 41 per cent of the Centre’s share of GST collection on Health Insurance is devolved back to the states again as part of Tax Devolution as per the Finance Commission’s formula, she had said.

The government has collected Rs 8,263 crore towards GST on health insurance premium in 2023-24 fiscal year, Parliament was earlier informed .

The Minister of State for Finance Pankaj Chaudhary said the government has received representations requesting for exemption or reduction in the rate of GST on life insurance and health insurance.

However, certain insurance schemes catering to poor sections of the society and differently-abled, such as Rashtriya Swasthya Bima Yojana (RSBY), Universal Health Insurance Scheme, Jan Arogya Bima Policy and Niramaya Health Insurance Scheme are exempt from Goods and Services Tax (GST).

In 2023-24, the GST collection from health insurance premium stood at Rs 8,262.94 crore, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium.

In the 2022-23 fiscal, Rs 7,638 crore GST was mopped up from health insurance premium, and another Rs 963 crore from health reinsurance premium.

In the 2021-22 financial year, GST of Rs 5,354 crore was mobilised from health insurance premium, while Rs 826 crore came in from health reinsurance premium.

In reply to a separate question, Chaudhary said after the introduction of GST with effect from July 1, 2017, GST is leviable on life insurance and health insurance services.

GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising representatives from both the Centre and the States/UTs, he added.