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Nirmala Sitharaman: If the GST Council recommends a reduction in GST rates on health or life insurance, the cost of insurance for the policyholder is expected to reduce. Finance Minister Nirmala Sitharaman said this on Monday. In a written reply in the Lok Sabha, he said the GST Council, in its meeting on September 9, has decided to constitute a Group of Ministers to fully consider the issues related to GST on life and health insurance. Was recommended. The matter of revision of GST rates on life and health insurance is pending before the GoM. If the GST Council recommends a cut in the GST rate, the GST cut is expected to reduce the cost of insurance for the policy holder.’
The GST rate is applied separately on the insurance premium, so if the GST rate is lower, it is expected to directly benefit the policyholder. Especially in a competitive market where there are many insurance companies. This will reduce the cost of insurance to some extent. Currently, 18 percent GST is levied on premiums paid for life and health insurance policies.
The GST Council meeting under the chairmanship of Sitharaman is scheduled to be held on December 21, which will also be attended by ministers of state governments. The meeting is expected to discuss the report of the Group of Ministers on reducing GST on life and health insurance.
The central and state governments collected GST of Rs 16,398 crore from health services and life insurance policies in the financial year 2023-24. In which GST collection of Rs 8,135 crore was made from life insurance and Rs 8,263 crore was collected from health insurance. Additionally, Rs 2,045 crore was collected at the GST rate from reinsurance on life and health insurance in the last financial year, which includes Rs 561 crore collected from reinsurance on life and Rs 1,484 crore from health care revenue.
The GST Council meeting is going to be held in Jaisalmer on 21st December. In which the issue of GST on life and health insurance is expected to be considered. The first meeting of the Group of Ministers on Life and Health Insurance was held on October 19 under the chairmanship of Bihar Deputy Chief Minister Samrat Chaudhary.
According to sources privy to the matter, the Group of Ministers has largely agreed on exempting insurance premiums paid for term life insurance policies and health insurance of senior citizens from GST. Additionally, it is proposed to exempt individuals other than senior citizens from GST premium paid for health insurance up to Rs 5 lakh. However, premiums paid for policies with health insurance cover above Rs 5 lakh will be exempted from 18 per cent GST.