The GST Council Meet, led by Union Finance Minister Nirmala Sitharaman, has taken significant steps towards potentially revising the GST rates on life and health insurance premiums. This move comes amid growing demands from various quarters for tax exemptions on insurance premiums.
Updates from the 54th GST Council Meeting
- Formation of Group of Ministers (GoM): The GST Council has decided to form a Group of Ministers (GoM) to review the current GST rates on life and health insurance. The GoM, headed by Bihar Deputy Chief Minister Samrat Choudhary, will evaluate the implications of reducing or exempting GST on these premiums. The report is expected by October, with the GST Council set to deliberate on the findings in its November meeting.
- Discussion Points: Finance Minister Sitharaman revealed that the GoM would address several complex issues, such as whether exemptions should be universal or targeted (e.g., for senior citizens) and how to handle group insurance policies. These considerations aim to balance the need for tax relief with practical implementation challenges.
Responses and Reactions
- Opposition Demands: The topic of GST on insurance premiums has been a point of contention in Parliament. Opposition leaders have called for the removal of GST on health and life insurance premiums. Additionally, Transport Minister Nitin Gadkari has supported this call by urging the Finance Minister to exempt these premiums from GST.
- Finance Minister’s View: Sitharaman pointed out that 75% of GST revenue is allocated to states, and suggested that state finance ministers should also bring proposals to the GST Council to address the issue comprehensively.
Other Major Decisions
- Tax Reductions: The GST Council has approved the reduction of GST rates on cancer drugs from 12% to 5% and on namkeens from 18% to 12%.
- Compensation Cess Review: A GoM will also be formed to discuss issues related to the compensation cess, which is set to expire after March 2026.
As discussions continue, the GST Council’s upcoming decisions will be closely watched by taxpayers and stakeholders in the insurance sector. For further updates, stay tuned.
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