The GST Council on December 21 again deferred a decision to exempt and cut taxes on health and life insurance premiums. The reason for this is that the ministers’ panel needs more time to reach a consensus on the matter.
“Some members said more discussions required. We (GoM) will meet in January again,” Bihar Deputy CM Samrat Chaudhary told reporters after the GST Council meeting.
A Group of Ministers (GOM) set up by the Council under Chaudhary, in its meeting in November had agreed on exempting insurance premiums paid for term life insurance policies from GST.
Also premium paid by senior citizens towards health insurance cover has been proposed to be exempted from the tax.
Besides, premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh is proposed to be levied a GST of 5%.
However, 18% GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh.
Finance Minister Nirmala Sitharaman said during a briefing after the GST Council meeting, “The GoM on health insurance related GST work requires more time as IRDAI’s inputs are awaited. GoM on insurance has discussed relief on health, life insurance in detail. But after getting IRDAI’s inputs the GoM will finalise report.”
Also read: Higher GST on sin goods to offset losses from insurance
It is expected that passing on the GST relief to consumers through cheaper insurance policies will increase policy sales, which could offset the revenue loss due to the sector’s demand elasticity.
On the development, MS Mani, Partner, Deloitte India, said, “While there is now an inevitable delay in the decision-making for health and term insurance, insurance companies, brokers and consumers would expect that the final decision in the next meeting takes into account specific situations such as group policies with varying insurance coverage levels for employees, family floater health cover where some members may be senior citizens etc.”
It is also necessary to have reasonable limits for the possible lower rates, considering the significant increases in healthcare costs, Mani added.
Experts are of the view that GST rationalisation on health and life insurance premiums would alleviate financial burdens on consumers,
» Read More
