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The Goods and Services Tax (GST) Council in its 54th meeting held Monday broadly converged on the need to reduce the tax rate for health and life insurance premiums from 18 per cent but the specific proposal has now been referred to the Group of Ministers (GoM) for further discussion, sources said. The GoM on rate rationalisation along with ministers from some states will discuss the issue in further detail, sources said.
The GoM on rate rationalisation will meet in Goa on September 23 and the next GST Council meeting will be held in November. “There was broad consensus for GST on health and life insurance premiums to be reduced, but modalities will be decided in the next Council meeting,” a source said.
The existing GoM on rate rationalisation along with some more states will discuss the issue of health and life insurance premiums in detail, the source added. The fitment committee, which includes officials from states and Centre, presented detailed numbers on the proposal to reduce GST on health and life insurance premiums in the Council meeting. The GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, is still ongoing.
In August, the reconstituted GoM on rate rationalisation under the GST regime had met for the first time and broadly agreed to not make any changes with the existing slabs in the indirect tax regime. State finance ministers, who participated in the meeting, had also said that the issue of reduction of GST rate in health and life insurance premiums was raised in the meeting of the GoM but was being reviewed by the fitment committee.
On August 27, Sitharaman had said both rationalisation of rates and tweaking of slabs under GST are on the discussion table, adding that the discussions will go item-by-item and make a comparison of the current rates with the revenue neutral rate.
In 2023-24, the Centre and states had 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.
Opposition leaders including Leader of Opposition in Lok Sabha Rahul Gandhi, Trinamool Congress chief Mamata Banerjee have demanded withdrawal of GST on life and health insurance premiums. Banerjee had also written a letter to Union Finance Minister Nirmala Sitharaman for rollback of GST on life insurance and health insurance premiums. Earlier on July 28, Union Minister of Road Transport and Highways Nitin Gadkari wrote to Finance Minister Sitharaman, saying GST on life and medical insurance premiums amounted to taxing the “uncertainties of life”. Sitharaman had last month said that tax was levied on insurance premiums even before the imposition of GST and that GST revenues are shared between states and the Centre.
