GST Council could heed to Gadkari’s call to exempt life insurance from GST; ₹200 crore revenue loss likely
By: Admin
August 30, 2024
Categories: GST Recent News
4 Min Read
In a significant development, the Goods and Services Tax (GST) Council is likely to exempt life insurance from GST during its upcoming meeting on September 9.
The move, which has garnered widespread support, could lead to a revenue loss of ₹200 crore annually, according to a senior government official.
“The government has been receiving representations from various stakeholders, seeking exemption for life insurance. The revenue loss is estimated to be around ₹200 crore annually,” the official told Moneycontrol.
The fitment committee of the GST Council has built a consensus to exempt life insurance from GST, the official confirmed, adding that the committee is still examining a proposal for health insurance.
All types of health and life insurance policies attract 18 percent GST.
The fitment committee consists of state and central revenue officials who review proposals to change GST rates. The committee’s recommendations are then presented to the GST Council for consideration.
This potential exemption comes in response to numerous representations from industry stakeholders who argue that the current GST on life insurance policies increases the cost for policyholders and acts as a deterrent for people looking to secure financial protection for their families.
However, the decision is not yet finalised, and the GST Council will make the final call during its upcoming meeting.
“The GST Council’s decision will have to balance the revenue implications with the broader goal of increasing life insurance coverage across the country,” an official said.
The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state finance ministers, serves as the apex decision-making body for GST-related matters in India. In the Council of India, the central government has one-third of the total votes, while all state governments, combined, have two-thirds.
Adding weight to the demand for exemption, Union Minister for Road, Transport and Highways, Nitin Gadkari, had formally appealed to the finance minister to withdraw the GST on life and medical insurance premiums. In a letter dated July 28, Gadkari had said that levying GST on life insurance premium amounts to levying tax on the “uncertainties of life”.
“Tax neutralisation of life insurance would have a positive impact on policyholders and insurance sector. However, it will negatively affect tax collections. Post a GST exemption, insurance companies must pass on the benefit of lower taxes to policyholders,” an expert told Moneycontrol
