GST Council to consider proposal to rationalise rates for life, health insurance premium

Thinking of buying or renewing your life insurance and health insurance? Well, the government could soon be giving you a tax breather. Come December, sources say that the GST Council is likely to meet and consider the report on the proposal to rationalise rates on life and health insurance premium.

“The GST Council is likely to meet in December, post the elections in Maharashtra and Jharkhand. The council will study the report of the Group of Ministers (GoM) and then take a call on the proposal in this meeting,” sources said.

Sources further said that the GoM, headed by Bihar Deputy CM – Samrat Chaudhary had called a detailed meeting on the issue in New Delhi on October 19, post which is understood to have formed a consensus.

“As per the GoM, it is likely to propose a complete exemption of GST on premium for pure term life insurance and pure term life insurance covering family members,” sources added.

As per the calculation given by the fitment committee, if this proposal is accepted, it could lead to a potential revenue loss of about ₹213 crore per annum, according to the sources.

Similarly, “the GoM is likely to propose GST exemption on all health insurance policies for senior citizens and for non-senior citizen, the exemption is proposed for policies with a cover up to ₹5 lakh,” the sources said.

If approved, the revenue implication from rationalisation of GST on health insurance premia could be ₹2,100 crore per annum, sources said.

Currently all insurances and re-insurances come with an 18% GST.

What is yet to be seen is whether government will be able to bite this bullet to give a relief to the people.

Source: CNBC TV18