The final decision by the GST Council on taxation of insurance premium is likely to be taken based on the report of the Group of Ministers in its next meeting in November.
The GST Council has constituted a 13-member Group of Ministers (GoM) to suggest GST rates on premiums of health and life insurance products and submit its report by October 30. Bihar Deputy Chief Minister Samrat Choudhary is the convener of the Group of Ministers. The members of this group include members from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana. In the 54th meeting of the GST Council held on September 9, it was decided to form a Group of Ministers to examine and review the existing tax structure of GST on life and health insurance.
The final decision on taxation of insurance premium is likely to be taken by the Council in its next meeting in November based on the report of the Group of Ministers. Currently, 18 per cent Goods and Services Tax (GST) is levied on insurance premium.
What are the panel’s suggestions?
The terms of reference (TOR) of the panel also includes suggesting tax rates on health/medical insurance including individual, group, family floater and other medical insurance for various categories such as senior citizens, middle class, persons with mental illness, and suggesting tax rates on life insurance including term insurance, life insurance with investment plans (whether individual or group) and reinsurance.
The office memorandum issued by the GST Council Secretariat on the formation of the GoM on life and health insurance said, “The GoM is to submit its report by October 30, 2024.” Some opposition-ruled states, including West Bengal, had demanded complete exemption from GST on health and life insurance premiums, while some other states were in favour of reducing the tax to five per cent.
Even Transport Minister Nitin Gadkari had written to Finance Minister Nirmala Sitharaman on the issue in July, saying “levying GST on life insurance premium is akin to taxing the uncertainties of life.”
