The GoM to decide on the GST rate on life and health insurance met on Saturday and decided to exempt GST on premiums paid for health insurance with coverage of Rs 5 lakh for individuals other than senior citizens.
New Delhi: Goods and services tax (GST) on term life insurance premiums, and premium paid by senior citizens for health cover is likely to be exempted from tax, an official said on Saturday.
The GoM to decide on the GST rate on life and health insurance met on Saturday and decided to exempt GST on premiums paid for health insurance with coverage of Rs 5 lakh for individuals other than senior citizens.
The final decision in this regard will be taken by the GST Council
Officials premiums paid for health insurance coverage of above Rs 5 lakh will continue to attract 18 per cent GST.
Currently, 18 per cent GST is levied on life insurance premiums paid for term policies and family floater policies.
“GoM members are broadly on board for cutting my rates on insurance premiums. A final decision will be taken by the GST Council,” an official said.
Bihar Deputy Chief Minister Samrat Chaudhary said, “Every GoM member wants to give relief to people. Special focus be on senior citizens. We will submit a report to the council. A final decision will be taken by the council”.
However, there might be no GST on insurance premium paid for senior citizens, irrespective of the coverage amount.
The GST Council in its meeting last month had decided to set up a 13-member GoM to decide on tax on health and life insurance premiums.
Choudhary is the convenor of the GoM. The panel includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana.
The GoM has been mandated to submit its report to the Council by October-end.
The GST exemption/reduction on life and health insurance is a long-pending demand of the industry as the move would alleviate the tax burden on both insurers and policyholders.
While most of the panel members of the GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, pitched for “full exemption” on health and life policy premiums, a few panel members suggested reducing the rate to 5 per cent from the current 18 per cent.
The ministerial panel, tasked to rationalise rates, is scheduled to submit its recommendation to the GST Council by October 31. The final decision in this regard will be taken by the GST Council when it meets next.
At present, 18 per cent GST is levied on life and health insurance premiums.
The GST Council took up the matter in the September meeting, following the debate over the 18 per cent GST levied on life and health insurance premiums. The panel learnt to have discussed the revenue implication in various options suggested by the Fitment Panel — comprising revenue officials of the Centre and states.
Other options discussed during the GoM meeting included exempting premiums paid by senior citizens and premiums with coverage up to Rs 5 lakh, or alternatively, only exempting premiums paid by senior citizens from the GST ambit.
Last month, the GST Council, headed by Finance Minister Nirmala Sitharaman, set up a GoM on slashing the tax rate on life and health insurance, as well as reducing the GST on cancer drugs. The 54th GST Council meeting, held on September 9, reached a “broad consensus” to bring relief to individuals and senior citizens with a decision on the GST applied to health insurance premiums.
Agencies