Let us tell you that the final decision on the issue of tax on insurance premium will be taken by the GST Council in its next meeting in November, which will be based on the report of the Group of Ministers.
GST latest news: The first meeting of the ministerial committee will be held on October 19 to decide on reducing GST on health and life insurance premiums. Let us tell you that currently 18 percent GST is levied on insurance premium. There is a demand to remove or reduce this tax. The GST Council in its meeting earlier this month decided to form a 13-member ministerial group to take a decision regarding tax on health and life insurance premiums.
Who are in the 13-member ministerial group?
Bihar Deputy Chief Minister Samrat Chaudhary is the convener of the ministerial group. It also includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana. The ministerial group has been directed to submit its report to the council by the end of October. Let us tell you that the final decision on the issue of tax on insurance premium will be taken by the GST Council in the next meeting to be held in November, which will be based on the report of the ministerial group.
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These issues are also before the committee
The terms of reference (TOR) of the committee include health/medical insurance which includes individual, group, family floater and other medical insurance for different categories like senior citizens, middle class, people suffering from mental illness. Along with this, their tax rate will also be discussed. There is also a provision in the TOR to suggest tax rates on life insurance. This includes term insurance, life insurance with investment plans, whether individual or group and reinsurance.
Demand is being made
Some opposition-ruled states, including West Bengal, have demanded complete exemption from GST on health and life insurance premiums, while some other states were in favor of reducing the tax to five percent. Union Transport Minister Nitin Gadkari also wrote a letter to Finance Minister Nirmala Sitharaman on this issue in July, saying that imposing GST on life insurance premium is like imposing tax on the uncertainties of life.
How much was the collection
In the financial year 2023-24, the Center and the states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was obtained from GST on health reinsurance premium. Nirmala Sitharaman had said in her reply during the discussion on the Finance Bill in the Lok Sabha in August that 75 percent of the GST collection goes to the states and opposition members should ask the finance ministers of their states to bring a proposal in the GST Council.
