GST Council Delays Decision On Tax Reduction For Life, Health Insurance Premiums

Bihar's Deputy Chief Minister, Samrat Chaudhary, said that another GoM meeting on insurance is necessary to finalise the tax treatment for group policies, individual policies, & senior citizens' plans

In its November meeting, the GST Council, led by Chaudhary, formed a Group of Ministers that agreed to exempt GST on premiums paid for term life insurance policies

Source : PTI

The GST Council on Saturday deferred its decision on reducing the tax rate on life and health insurance premiums, according to officials. At the 55th GST Council meeting held in Jaisalmer, chaired by Union Finance Minister Nirmala Sitharaman and attended by state finance ministers, it was decided that additional technical details needed to be worked out. The Council tasked the Group of Ministers (GoM) with further deliberations.

Bihar's Deputy Chief Minister, Samrat Chaudhary, stated that another GoM meeting on insurance is necessary to finalise the tax treatment for group policies, individual policies, and senior citizens' plans.

“Some members said more discussions required. We (GoM) will meet in January again,” Chaudhary told the news agency PTI.

In its November meeting, the GST Council, led by Chaudhary, formed a Group of Ministers (GoM) that agreed to exempt GST on premiums paid for term life insurance policies.

Additionally, it was proposed that GST be exempted from premiums paid by senior citizens for health insurance coverage. The GoM also recommended exempting GST from health insurance premiums paid by individuals, excluding senior citizens, for policies with coverage up to Rs 5 lakh.

However, premiums for health insurance policies offering coverage exceeding Rs 5 lakh will continue to attract an 18 per cent GST.

Additionally, GoM recommended a proposal to the GST Council to increase the tax on sin goods, including aerated beverages, cigarettes, tobacco, and related products, to 35 per cent from the current 28 per cent.

Under the existing GST structure, the four tax slabs of 5 per cent, 12 per cent, 18 per cent, and 28 per cent will remain unchanged, with the GoM proposing the new 35 per cent rate exclusively for sin goods. The GoM also recommended rationalising tax rates on apparel. According to the proposal, ready-made garments priced up to Rs 1,500 would attract a 5 per cent GST, those priced between Rs 1,500 and Rs 10,000 would incur an 18 per cent tax, and garments costing above Rs 10,000 would face a 28 per cent GST. Currently, garments priced up to Rs 1,000 are taxed at 5 per cent, while those above Rs 1,000 attract a 12 per cent GST.