GoMs to Discuss GST Rates on Insurance and Overall Rate Rationalisation on Saturday
Date: October 18, 2024
Categories: #GSTRecentNews
Read Time: 4 Min
Two Groups of Ministers (GoMs) will meet on Saturday under the leadership of Bihar’s Deputy Chief Minister Samrat Chaudhary to discuss GST rates on insurance premiums and broader rate rationalisation. This meeting could lead to important decisions on GST structure adjustments.
Key Focus: GST on Insurance Premiums
The GoM on insurance, consisting of 12 members, will review GST rates on life and medical insurance for individuals, groups, senior citizens, and various other categories like mental illness.
They will assess current tax structures and may recommend new rates for health, medical, and life insurance.
The GST rate on insurance premiums currently stands at 18% for health and term insurance plans. Endowment plans have a tiered structure, with 4.5% GST on the first year’s premium and 2.25% from the second year onward. Single premium annuity policies attract 1.8% GST.
The GoM is expected to submit its report by October 30.
Rate Rationalisation and Slab Adjustments
Another six-member GoM will deliberate on rate rationalisation, aiming to possibly simplify the GST structure. Discussions could include:
Slab restructuring: Currently, GST has four key slabs: 5%, 12%, 18%, and 28%, along with special rates for certain items.
There’s speculation about merging the 12% and 18% slabs, or bringing more items into the 5% slab—notably medical, pharma-related items, bicycles, and bottled water.
While the GoM has no set deadline, this meeting could produce recommendations in parts regarding these changes.
Political Context
GST collection on health insurance premiums has caused controversy, with collections exceeding ₹21,000 crore over three years (FY22-FY24). This sparked debates in Parliament, with Finance Minister Nirmala Sitharaman urging Opposition states to raise concerns with their respective Finance Ministers. States receive three-fourths of GST revenue from insurance premiums.
Stay tuned for updates on GST rate adjustments following the Saturday meetings, as they may significantly impact insurance premiums and consumer goods.
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