The Centre may push back against a proposal to give goods and services tax (GST) exemption for certain insurance policies, as it reckons that this would raise the cost of insurers, leading a firming up of premium amounts. However, it will strongly pitch for a major reduction in the GST rates for insurance sector.
This view may be conveyed to the GST Council as it meets next. The Council is likely to consider the report of group of ministers (GoM), which reviewed taxation of health and life insurance premiums in its next session.
ALSO READYou still need EPF, NPS, insurance
Giving health and life insurance premiums a complete exemption from the GST may lead to an increase in their costs, which will be contrary to what the government intends to do, Sanjay Kumar Agarwal, chairman, Central Board of Indirect Taxes and Customs (CBIC) said on Thursday. “A complete exemption will deny the benefit of input tax credit (ITC) to insurance companies, which will be factored into the premiums they charge from people,” Agarwal told FE in an interview. Under the GST laws, ITC benefit is not available for those goods and services which are exempt from the levy of the GST.
Also Read Not worried about rupee fall: Finance Secretary Saif Ali Khan’s health insurance claim triggers debate on disparities in coverage, Netizens slam middle-class neglect – Here’s what leaked document revealed Gene therapy exempted from GST; duty cuts on critical medicines for cancer and rare diseases expected Protect insurance payouts from creditors by buying term plan under MWP Act
“The central government wants to provide relief to insurance holders, but we don’t want any situation where they have to bear higher costs. The Group of Ministers is preparing its report, thereafter the Council will decide,most likely in the next meeting,” said the CBIC Chairman.
The 13-member GoM in its report submitted to the GST Council in December had recommended a GST exemption for premiums paid on pure term life insurance policies which cover family members, and on premiums paid on health insurance policies for senior citizens, above the age of 60.
The GoM had also suggested lowering the GST rate on all individual health insurance policies to 5%,
» Read More
