EASING THE PREMIUM PRESSURE

The GST council's upcoming meeting hopes to address potential tax reductions on health and life insurance to improve affordability and insurance penetration while balancing fiscal priorities

The Goods and Services Tax (GST) council is scheduled to meet on 21st December to decide on a crucial matter concerning potential exemptions or reductions of the GST rate on health and life insurance.

The upcoming meeting will be chaired by Union Finance Minister Nirmala Sitharaman along with her state counterparts. The meeting will take place in Jaisalmer, and the council is anticipated to address rate rationalization, with discussions likely leading to recommendations that could lower the tax rates on several essential goods for the general public from the current rate of 12% to 5%.

Currently, the GST framework operates under a four-tier tax structure, which includes slabs at 5%, 12%, 18%, and 28%. The council has previously established two Groups of Ministers (GoMs) - one to review GST rates across various items, and another specifically dedicated to evaluating the tax applied to health and life insurance premiums.

During a prior meeting on 9th September, the council tasked the GoM with finalizing a report regarding the GST levy on insurance by the end of October. Subsequently, the GoM focused on health and life insurance convened last month and reached a preliminary tentative agreement to exempt GST on premiums paid for term life insurance policies and health insurance aimed at senior citizens.

A recent meeting of the GST council, which took place in the capital city of Delhi under the leadership of Finance Minister Nirmala Sitharaman, saw attendance from finance ministers from various Indian states and senior officials from the Ministry of Finance.

They engaged in comprehensive discussions on several pressing issues impacting the GST framework. Notably, the agenda included considerations for reducing GST on health insurance premiums and extending tax relief to foreign airlines.