New Delhi, Aug 20 (PTI) The Centre has proposed exempting life and health insurance policies for individuals from GST, Bihar Deputy Chief Minister and convenor of insurance GoM Samrat Choudhary said on Wednesday.
Currently, health and life insurance premium attracts 18 per cent GST.
The 13-member state Group of Ministers on insurance held a meeting on Wednesday.
Almost all states were in favour of the proposal, but they asked the GST Council to device a mechanism by which the GST rate cut benefits are passed on to the customer, said Telangana Deputy Chief Minister Mallu Bhatti Vikramarka, a member of the GoM.
"We made it clear that the GST reduction benefit should go to policyholders and not companies, some mechanism has to be developed.
"States wanted it (tax rate) to be brought down or exempt. At the same time many states told the (GoM) meeting that some mechanism must be developed so that rate cut benefit reaches the people. The GST Council will decide a mechanism," Vikramarka said.
About Rs 9,700 crore annual revenue loss is estimated on account of GST exemption to individual insurance policies, he said.
The GoM will submit its report to the GST Council. The report will also include views and concerns expressed by some state finance ministers, Choudhary said.
"The Centre's proposal is clear that individual insurance policies should be exempt from GST. This has been discussed and the GoM report will be presented to the Council," Choudhary told reporters here after the meeting of the GoM.
"All members have given their approval for lowering rates. Some states have given their own views," he said, adding a final call on rates will be taken by the Council.
The Centre's proposal on insurance is part of the overall next-Gen GST reform proposal under which goods and services tax will be levied at 2 rates-- 5 and 18 per cent -- based on categorisation of products as merit and standard.
The GoM on health and life insurance was set up in September to suggest tax rates.
The panel, which includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana, has been mandated to submit its report to the GST Council by October end.
In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium.
This report includes content sourced from Press Trust of India (PTI), edited for clarity and context.
