GST Council Forms GoM to Review Tax Rate on Health, Life Insurance

The GST Council has constituted a 13-member Group of Ministers (GoM) to review and suggest GST rates on health and life insurance premiums. The report is due by October 30, 2024, and Bihar Deputy CM Samrat Choudhary leads the group. The decision was made during the 54th GST Council meeting on September 9, 2024. A final decision will be made in November based on the GoM’s recommendations.

Key Objectives of the GoM

Review GST rates on health and life insurance, including premiums for individual, group, and family plans.

Examine tax rates on specialized categories such as senior citizens and those with mental illness.

Review rates on term insurance, life insurance with investment plans, and reinsurance.

Current GST on Insurance

Currently, a GST rate of 18% applies to health and life insurance premiums. Some opposition-ruled states like West Bengal have called for complete exemption, while others advocate reducing the rate to 5%.

Revenue from GST on Insurance

In 2023-24, Rs 8,262.94 crore was collected from GST on health insurance premiums, and Rs 1,484.36 crore from health reinsurance premiums. Transport Minister Nitin Gadkari also voiced concerns, stating that taxing insurance premiums equates to taxing life’s uncertainties.

Next Steps

The GST Council will make a final decision on the tax structure during its November meeting, after receiving the GoM’s report.

Piyush Shukla

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