Ministerial Panel to Discuss Lowering GST on Health and Life Insurance Premiums

The newly-formed GoM will convene on October 19 to decide on reducing or exempting GST on health and life insurance premiums, currently taxed at 18%. Bihar Deputy Chief Minister Samrat Choudhary leads the panel, which includes ministers from various states. The final decision is expected by November.

The ministerial panel formed to discuss reducing the Goods and Services Tax (GST) on health and life insurance premiums will hold its inaugural meeting on October 19, according to officials.

At present, insurance premiums are subject to an 18% GST, prompting calls for either exemption or a reduction in the tax.

Earlier this month, the GST Council decided to establish a 13-member Group of Ministers (GoM) to address this issue. Bihar Deputy Chief Minister Samrat Choudhary has been appointed as the convenor, with ministers from states including Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana.

The GoM is tasked with submitting its report to the Council by the end of October, with a final decision on the taxation of insurance premiums likely to be made in the next Council meeting in November, based on the GoM's findings.

The terms of reference (ToR) for the panel include suggesting tax rates for various categories of health and medical insurance, such as individual, group, and family floater plans. It also covers life insurance, including term insurance and life insurance with investment plans.

Some Opposition-ruled states, including West Bengal, have called for a complete exemption of GST on health and life insurance premiums, while other states favor lowering the tax to 5%. Union Transport Minister Nitin Gadkari also voiced opposition to the current tax in a letter to Finance Minister Nirmala Sitharaman in July.

In the 2023-24 fiscal year, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premiums and Rs 1,484.36 crore from health reinsurance premiums.

Sitharaman noted during a discussion on the Finance Bill in the Lok Sabha in August that 75% of the GST collected goes to states, urging Opposition members to have their state finance ministers bring the proposal to the GST Council.

(With inputs from agencies.)