In a move, that would cheer the customers of the Indian insurance industry, the government has now almost finalised the plans to reduce goods and services tax (GST) both in Term Life Insurance and Health Insurance from 18 per cent to 12 per cent with Input Tax Credit(ITC) and want insurers to pass on this benefits to the customers.
On Tuesday, senior officials Ministry of Finance, Insurance Regulatory Development and Authority(IRDA) and insurers had met here to finalise the GST reduction proposals before they are sent to GST Council, headed by Finance Minister Nirmala Sitharaman and comprising state counterparts, that will take a final call on the move.
Though, the details and technicalities of the GST reduction proposals are yet to be known, the government and the IRDAI officials were very particular that the benefits out of any GST reduction should be strictly passed on the policyholders.
The issue of loss of revenue to the central and state governments were also discussed on Tuesday meeting and the officials had said that the government is now prepared to forgo the revenue that will be benefitting the common man who of late is overburdened with exorbitant premiums, said sources, who have attended the meeting.
Sachin Jain, joint secretary (TRU-II) in the Central Board of Indirect Taxes and Customs(CBIC) in the Department of Revenue, Ministry of Finance, Mandakini Balodhi director (Insurance), Department of Financial Services, Ministry of Finance, a team of IRDAI officials headed by G Suryakumar, chief general manager(CGM),(Finance & Investment), officials from six life insurance companies including Life Insurance Corporation(LIC) and General Insurance Council had attended the meeting and have prepared the GST reduction proposals.
Earlier, at the 55th GST Council meet on Dec 21, 2024 in Jaisalmer, the Council, chaired by Sitharaman, had deferred the discussion on proposals for lowering GST rates on life and health insurance premiums.
They had wanted that some more technicalities needed to be ironed out and tasked the Group of Ministers (GoM) for further deliberations.
The GoM could not reach a consensus on insurance premiums, as several states had expressed concerns regarding potential revenue losses resulting from the proposed reduction in GST rates.
A GOM set up by the Council under Bihar’s Deputy Chief Minister Samrat 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 had been proposed to be exempted from the tax.
Besides, the GoM had said premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh is proposed to be exempted from GST.
However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh, the GoM had recommended.
Source from: https://asiainsurancepost.com/archives/62990
