GST Council forms GoM to review tax rate on health, life insurance; report by Oct 30
New Delhi: The GST Council on Sunday constituted a 13-member Group of Ministers (GoM) to recommend Goods and Services Tax (GST) rates on premiums for various health and life insurance products. The GoM, led by Bihar Deputy Chief Minister Samrat Choudhary, is tasked with submitting its report by October 30.
The panel comprises representatives from 12 states, including Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana. The decision to form the GoM was made during the 54th GST Council meeting held on September 9, which focused on reviewing the current tax structure for life and medical insurance. A final decision on the taxation of insurance premiums is expected to be made during the next GST Council meeting in November based on the GoM’s recommendations.
Currently, insurance premiums are subject to an 18 per cent GST, which has sparked debates across states. Some states, particularly those governed by opposition parties like West Bengal, have demanded a complete exemption of GST on health and life insurance premiums. Others are advocating for a reduction in the tax rate to 5%. Union Transport Minister Nitin Gadkari also raised concerns earlier this year, arguing that imposing GST on life insurance premiums effectively taxes the uncertainties of life.
The GoM’s Terms of Reference (ToR) include evaluating the tax rate for various types of health and medical insurance, including individual, group, family floater policies, and coverage for special categories like senior citizens and individuals with mental illness. Additionally, the GoM will assess tax rates on life insurance policies such as term insurance, investment-linked plans, and re-insurance.
In the 2023-24 fiscal year, the central and state governments collected Rs 8,262.94 crore from GST on health insurance premiums, while Rs 1,484.36 crore was garnered from health reinsurance premiums. Finance Minister Nirmala Sitharaman had previously addressed the issue in the Lok Sabha, stating that 75 per cent of GST revenue is allocated to states and urged opposition leaders to address their concerns through their state finance ministers in the GST Council.
