GST Council decides to form new GoM for health insurance premium

The much-anticipated announcement regarding a potential reduction in the Goods and Services Tax (GST) on health insurance premiums has been postponed to November meeting. In its 54th meeting on Monday, the GST Council decided to form Group of Ministers (GoM) to look into the issues pertaining to GST on the life insurance and health insurance. GoM members are Bihar, UP, West Bengal, Karnataka, Kerala, Rajasthan, Andhra Pradesh, Meghalaya, Goa, Telangana, Tamil Nadu, Punjab, and Gujarat.

It has been asked submit the report by end of October 2024.

Also Read: GST Council Meeting Key Takeaways

The Fitment Committee, comprising the Centre and state tax officials, on Monday presented a report giving data and analysis and implications of GST reduction on life, health and reinsurance premiums.

The 54th GST Council meeting was expected to bring relief to individuals and senior citizens with a significant decision on the Goods and Services Tax (GST) rate applied to health insurance premiums. The current GST rate on health and life insurance policies stands at 18 per cent, and the industry was expecting that this could be reduced to ease the financial burden on policyholders.A report on the implications of GST levied on life, health, and reinsurance premiums will be presented to the GST Council, reported PTI, citing sources. After reviewing this report, the Council was expected to discuss whether to proceed with a reduction in the GST rate on health insurance premiums. There was also a speculation that the GST on health insurance premiums could be slashed from 18 per cent to nil.

The fitment committee, consisting of central and state tax officials, convened on Sunday to weigh the pros and cons of reducing the GST rate on health premiums.

Additionally, the GST Council is expected to address other financial matters, such as the taxation of online payments exceeding Rs 2,000. Currently, online transactions made through payment gateways are not subject to GST, and this issue was likely to be discussed during the meeting.

West Bengal Finance Minister Chandrima Bhattacharya had already submitted a request to reduce the 18 per cent GST rate on life and health insurance premiums. Bihar Deputy Chief Minister Samrat Chaudhary, who leads the reconstituted Group of Ministers on GST for rate rationalisation, acknowledged last month that changes to health insurance tax rates are under review.

The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state finance ministers, is responsible for determining the tax rate adjustments.