New Delhi
A big decision has been taken in the GST Council meeting. The Group of Ministers had proposed to reduce GST on health and life insurance premiums, which has been postponed to the next meeting of the GST Council. This means that people will still have to pay premium on their insurance as per the old tax rate.
In the 55th meeting of the GST Council, the reason given for postponing the decision to reduce the premium on health and life insurance was that there is a need for further clarification on this. The Council has asked the Group of Ministers (GOM) to present additional information to make its report more comprehensive. This suggests that the matter requires further investigation before taking any decision on revising GST rates or reducing premiums related to health and life insurance.
What are the current GST rates?
Currently, health insurance, term life insurance and unit-linked insurance plans come under the 18 percent GST rate. GST application in endowment plans is different, at the rate of 4.5 per cent in the first year and 2.25 per cent from the second year onwards. For life insurance, single premium annuity policies attract a GST rate of 1.8 percent. These rates apply equally to all age groups. The Group of Ministers (GOM) on health insurance had presented its recommendations to the revenue officials of the state and central governments on December 16.
Bihar Deputy CM Samrat Chaudhary said there will be another meeting of the GoM on insurance to decide about taxation on group, individual, senior citizen policies. Chaudhary told the media that some members said that more discussion was needed. We (GoM) will meet again in January.
The GST Council has constituted the Group of Ministers (GoM) on Insurance under the chairmanship of Chaudhary, which in its meeting in November had agreed to exempt insurance premiums for term life insurance policies from GST. Besides, it has also been proposed to exempt the premium paid by senior citizens for health insurance cover from tax.
There is also a proposal to exempt from GST the premium paid for health insurance up to Rs 5 lakh by individuals other than senior citizens. However, premiums paid for policies with health insurance cover above Rs 5 lakh will continue to attract 18 per cent GST.
What were the recommendations?
Exemption for life insurance: GoM had proposed GST exemption for pure term life insurance policies covering family members. This will mean that these policies will not be subject to GST, which will reduce the financial burden on policyholders.
Exemption on health insurance for senior citizens: Another key recommendation is exemption from GST on health insurance policies specifically for senior citizens, which will help in making healthcare more affordable for the elderly population.
Reducing GST rate on personal health insurance: The GOM has also proposed reducing the GST rate on all personal health insurance policies to 5 percent, but without the option of input tax credit (ITC). Its aim is to reduce the cost of health insurance premiums for individuals by keeping the process simple.
These shares will also be affected!
When the stock market opens on Monday, if there is no change in the GST rate, it may impact the shares of listed companies providing health insurance and life insurance like Policy Bazaar, Go Digit and Niva Bupa. Could.
