Discussions on GST on health insurance and term life insurance were in full swing for the past few days, but there was a sigh of relief when a major decision was taken at the GoM meeting last Saturday. Most members of the group of state ministers are in favor of cutting the GST to benefit the common man. A majority of members of the national ministerial group support a GST to reduce premiums. In this case, there is now hope for an end to this situation. However, the final decision will be taken at the next meeting of the GST Council. But let us tell you here that not everyone will get GST exemption, let us know every detail…
Policy discounts up to Rs 5 Lakhs
Term life insurance and health insurance premiums for seniors are exempt from the excise tax. At last Saturday’s ministerial meeting, most members agreed. The PTI report also quoted an official as saying, “The GOM (Group of Ministers), which decided to levy GST on health and life insurance premiums, has exempted goods and services on health insurance policies up to Rs 5 lakh paid by individuals other than senior citizens. Tax.” It was decided to exempt premiums from consumption tax.
Final approval at GST Council meeting
It is worth noting that premiums for term life insurance and family floater policies are currently subject to 18% GST. But ahead of Saturday’s meeting, reports quoted a senior official as saying that a group of ministers held a meeting to discuss the GST rates on life insurance and health insurance.
During this period, it has been decided to provide GST exemption on health insurance premiums up to Rs 5 lakh to people, except senior citizens. However, the final approval will be given at the GST Council meeting to be held in the coming days.
A meeting of 13 GoM members reached consensus
Health insurance above Rs 5 lakh will continue to attract 18% GST. This was the first meeting of the ministerial group, set up last month to make recommendations on increasing the GST rates on health and life insurance premiums. Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana Representatives of the state government participated in this state and ministerial government meeting.
Nitin Gadkari also requested
Notably, Union Minister Nitin Gadkari has also demanded reduction in the 18% goods and services tax levied on health and life insurance premiums. On July 28, 2024, Nitin Gadkari wrote to the Finance Minister demanding removal of GST applicable on life and medical insurance. He calls this tax a “tax on the uncertainty of life.”
Goods and services tax levied on financial services
The nationwide implementation of the Goods and Services Tax (GST) from July 1, 2017 has brought significant changes to the Indian tax system. Since then, a single tax has been levied across the country instead of separate levies. GST is an indirect tax levied on household goods, clothing, consumer goods, electronics, transport, real estate and services. Insurance is also considered a financial service and is included in this category. Both term insurance and medical insurance are subject to consumption tax at the rate of 18%.
