Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman chairs the 54th meeting of the GST Council, at Sushma Swaraj Bhawan in New Delhi, Monday, September 9, 2024.
Credit: PTI Photo
New Delhi: The GST Council has arrived at a broad consensus on reducing GST on health and life insurance premiums from the current 18 per cent, but a final decision would be taken in the next meeting, sources said.
The Fitment Committee, comprising the Centre and state tax officials, on Monday presented a report giving data and analysis and implications of GST reduction on life, health and reinsurance premiums.
"Broad consensus has been reached on GST rate reduction on health and life insurance but modalities would be decided in the next council meeting," one of the sources said.
The 54th meeting of the GST council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state ministers, is currently underway.
Sources said most states were on board with rate reduction as the monthly GST collections are seeing an uptrend providing room for taking taxpayer-friendly measures.
If GST rates are reduced, it would be beneficial for crores of policyholders as the premium would come down.
The monthly gross GST collections have stabilised at around Rs 1.75 lakh crore compared to Rs 90,000 crore in the first year of Goods and Services Tax (GST), introduced on July 1, 2017.
Insurance premiums in the pre-GST regime used to attract service tax.
With the pan-India rollout of GST in 2017, the service tax was subsumed into GST.
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.
The issue of taxation of insurance premiums figured in Parliament discussions with Opposition members demanding that health and life insurance premiums be exempt from the GST. Even Transport Minister Nitin Gadkari wrote to Sitharaman on the issue.
Sitharaman in her reply to a discussion on the Finance Bill had said that 75 per cent of the GST collected goes to states and the Opposition members should ask their state finance ministers to bring the proposal at the GST Council.
West Bengal Finance Minister Chandrima Bhattacharya had raised the insurance premium issue in the meeting of the GoM on rate rationalisation last month and the matter was referred to the Fitment Committee for further data analysis.