Your health, life insurance premiums to get cheaper? Govt mulls GST exemption

THe Centre has proposed that the GST should free life-time and wellness insurance policies for individuals, Bihar surrogate chief government minister Samrat Choudhary, who is also the convenor of insurance GoM (Group of Ministers), said on Wednesday.The 13-member state Group of Ministers on insurance held a meeting on Wednesday.While almost all states were in favour of the proposal, they also asked the GST Council to devise a mechanism by which the rate cut benefit reaches the people, according to a PTI news agency report.Currently, health and life insurance premium attracts 18 per cent GST.States have asked the GST Council to devise a mechanism by which the GST rate cut benefits are passed on to the customer, said Telangana deputy chief minister Mallu Bhatti Vikramarka, a member of the GoM. He also said that the states made it clear that the benefits of GST reduction should go to policyholders and not the companies, adding that some mechanism has to be decided at."At the same time, many states told the (GoM) meeting that some mechanism must be developed so that the rate cut benefit reaches the people. The GST Council will decide a mechanism," PTI quoted Vikramarka.GoM will submit its report to the GST Council. The report will include views and concerns expressed by some state finance ministers, Samrat Choudhary said.He also said that all states have given their own views on the lowering of rates, and the final call will be taken by the council.The Centre’s proposal on health insurance is a part of the next-Gen GST reform proposal under which goods and services tax will be levied at two rates, which are five and 18 per cent, based on categorisation of products as merit and standard.Also read: The fiscal implications of GST rationalisation | Number TheoryThe panel is set to submit its report on the decision by October end. It includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana. It has been mandated to submit its report to the GST Council by October end.Ahead of the GoM meetings, Union finance minister Nirmala Sitharaman, in her address, talked about the GST reform proposal. She said that the reform would be in the direction of making India Atmanirbhar.In 2023-24, the Centre and states collected ₹8,262.94 crore through GST on health insurance premiums, while ₹1,484.36 crore was collected on account of GST on health reinsurance premiums.