New Delhi/Jaisalmer, Dec 21 (IANS): The Goods and Services Tax (GST) Council on Saturday deferred the decision on rate cuts on life and health insurance premiums, as some more technicalities need to be ironed out.
The GST exemption/reduction on life and health insurance premiums is a long-pending demand of the industry, as the move would alleviate the tax burden on both insurers and policyholders.
According to people in the know, the GST Council in its 55th meeting in Jaisalmer, chaired by Union Finance Minister Nirmala Sitharaman, has deferred the decision on potential tax changes for insurance premiums.
While most of the panel members of the Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, had pitched for "full exemption" on health and life policy premiums, a few panel members suggested reducing the rate to 5 per cent from the current 18 per cent.
“Some members said more discussions were required. The GoM will meet in January again,” Chaudhary told reporters.
The GoM suggested exemption from GST on premiums paid for term life insurance policies. It was also proposed to exempt GST on premiums paid by senior citizens for health insurance cover.
For individuals other than senior citizens, an exemption was recommended for health insurance premiums covering policies up to Rs 5 lakh. However, the current 18 per cent GST rate would remain applicable for policies with coverage above Rs 5 lakh.
The GST Council will go for further deliberation on the recommendations in its next meeting, as some more technicalities need to be ironed out.
Meanwhile, the GoM on GST compensation cess is likely to get a six-month extension till June 2025 to submit their report.
Another key agenda at the meeting is to decide whether the 5 per cent GST on delivery charges by food delivery platforms will be applied retrospectively from 2022. Currently, food delivery companies do not pay GST on delivery charges. Also, the GST Council is likely to take up the issue of bringing aviation turbine fuel under the GST ambit.