The central government may soon announce a reduction in GST rates on term and health insurance premiums. In fact, the central government has held an important meeting with the insurance regulator and people representing this sector, in which there was an in-depth discussion on GST rates on insurance premium.
There has been a big update on the demand for reduction in Goods and Services Tax (GST) rates on premiums of health insurance and term insurance for a long time. The central government can announce reduction in GST rates on premiums of term and health insurance. In fact, the central government has held an important meeting with the insurance regulator and people representing this sector, in which there was an in-depth discussion on GST rates on insurance premium and a consensus was reached on the reduction.
The meeting was held on Tuesday
According to a report by ET Now, the issue was discussed with the Department of Financial Services (DFS), Insurance Regulatory and Development Authority (IRDAI) and people associated with the industry on Tuesday. ET Now has quoted an official associated with the matter as saying that the GST rate on health insurance and term insurance premium can be 12 percent.
At present, 18 percent GST has to be paid on insurance premium
At present, 18 percent GST has to be paid on term insurance and health insurance premium. Apart from this, 18 percent GST rate is also applicable on unit linked insurance plan.
The government expects a loss of 7000 crores
Earlier, insurance companies had expressed their inability to give 5 percent GST benefit to policy holders without input tax credit, after which a consensus is expected to be reached on 12 percent. However, if the GST rate on health and term insurance is reduced from 18 per cent to 12 per cent, the government is expected to suffer a revenue loss of Rs 7000 crore.
GST Council approval pending
Let us tell you that now this proposal will be sent to the GST Council headed by Finance Minister Nirmala Sitharaman. If the GST Council approves this proposal, then the GST rate will come down from 18 per cent to 12 per cent.
The Council had rejected the proposal in December
Let us tell you that in the 55th meeting of the GST Council held in December 2024, the proposal to cut rates on term and health insurance premium was canceled. However, most of the members of the GoM panel led by Bihar Deputy CM Samrat Chaudhary had proposed a complete exemption on health and life insurance policy premium, while some members had talked about reducing the GST rate from 18 percent to 5 percent. Demand for zero tax for senior citizens
Let us tell you that the panel had suggested exemption on term life insurance premium, while it had said that there should be complete exemption on health insurance premium for senior citizens. Apart from this, it was suggested to give exemption on policies with insurance coverage up to Rs 5 lakh for general citizens, while it was said to retain 18% GST on policies with coverage of more than Rs 5 lakh.
