According to media sources, the GST Council has established a broad consensus on lowering the GST rate on life and health insurance premiums from the existing 18%. However, a definitive decision is expected at the next council meeting. During the 54th GST Council Meeting, headed by Union Finance Minister Nirmala Sitharaman and attended by state finance ministers, the Fitment Committee submitted a report outlining the impact of the GST cut on these premiums. This committee, which included officials from both the Centre and the states, analyzed data and provided insights into how a rate drop may affect taxpayers.
The Government Plans to Decrease the GST on Health and Life Insurance
A person with knowledge of the issue stated: "A broad consensus has been reached on GST rate reduction for health and life insurance, but the specific modalities will be decided in the next council meeting."
This decision is projected to help millions of policyholders by lowering the total cost of their insurance payments. The rate cut comes as monthly GST collections have steadily increased, allowing for more taxpayer-friendly programs. Gross monthly GST collections have stabilized at roughly Rs 1.75 trillion, a considerable increase from Rs 90,000 crore when the GST was first implemented in July 2017.
Insurance premiums were subject to service tax prior to the GST regime's implementation. In fiscal year 2023-24 (FY24), Rs 8,262.94 crore was collected through GST on health insurance premiums, with an additional Rs 1,484.36 crore from GST on health reinsurance premiums.
No Decision regarding Digital Transactions
Meanwhile, Uttarakhand Finance Minister Premchand Aggarwal emphasized that no decision was made at the council meeting regarding taxing on modest digital transactions. The proposal to impose an 18% GST on payment aggregators for transactions under Rs 2,000 has been forwarded to the Fitment Committee for further examination.
GST on Helicopter Services is Decreased
The council has also voted to lower the Goods and Services Tax on helicopter services for pilgrims and visitors from 18% to 5%. The Fitment Committee will also look into the impact of GST on research and development efforts in educational institutions.
Health Insurance Providers' Shares are Trading the Red
On the market front, shares of major insurance companies such as Star Health, ICICI Lombard General Insurance, and Go Digit General Insurance are down due to fears over the imminent decision on insurance premium GST rates.
West Bengal Finance Minister Chandrima Bhattacharya had previously addressed the subject of insurance premium taxation during a Group of Ministers (GoM) meeting on rate rationalisation, prompting its referral to the Fitment Committee for further investigation.
