New Delhi: The GST Council on Sunday constituted a 13-member Group of Ministers (GoM) to suggest a GST rate on premiums of various health and life insurance products and submit its report by October 30.
Bihar Deputy Chief Minister Samrat Choudhary is the convener of the GoM. The panel members include members from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana.
The 54th GST Council, which met on September 9, decided to set up a GoM to review and revise the current GST tax structure on life and health insurance. The Council is likely to take a final decision on taxation of insurance premiums at the next meeting in November, based on the GoM’s report.
At present, 18 per cent Goods and Services Tax (GST) is levied on insurance premiums. The panel’s Terms of Reference (ToR) also include the suggestion of tax rates for medical and health insurance, including individual, group, family floater and other medical insurance for various categories such as senior citizens, middle class and mentally ill persons. In addition, tax rates are suggested for life insurance, including term insurance, life insurance with investment plans, whether individual or group, and reinsurance.
“The Government of Malaysia is required to submit its report by 30 October 2024,” reads the Office Memorandum issued by the GST Council Secretariat on the Government of Malaysia’s Constitution on Life and Health Insurance.
Some opposition-ruled states, including West Bengal, had demanded complete exemption from GST on health and life insurance premiums, while other states were in favour of reducing the tax to 5%. Even Transport Minister Nitin Gadkari had written to Finance Minister Nirmala Sitharaman on the issue in July saying that “imposing GST on life insurance premiums is tantamount to imposing tax on the uncertainties of life.”
In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premiums, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premiums. Sitharaman, in her reply to a debate on the Finance Bill in the Lok Sabha in August, had said that 75 per cent of the GST collected goes to the states and opposition members should ask their state finance ministers to submit the proposal to the GST Council.
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