The GST rate on the premium paid on health and life insurance may be reduced, CNBC-Awaaz has reported on August 8 citing sources familiar with the development, as a proposal in this regard has been sent to the GST rate rationalisation committee.
Sources told CNBC-Awaaz that the proposal talks about a 5 percent GST on health and life insurance premium, significantly lower than the current slab of 18 percent. Sources also said that the GST committee on rates is not in favour of fully exempting GST on premiums.
Shares of major insurance players - HDFC Life, LIC, SBI Life and ICICI Prudential - have reacted positively to the news report, though Moneycontrol is yet to independently verify the development.
Members of the GST rate rationalisation committee are scheduled to meet on August 22.
Late last month, Road, transport and highways minister Nitin Gadkari had written to Finance Minister Nirmala Sitharaman, seeking withdrawal of the 18 percent Goods and Services Tax (GST) on life and medical insurance premiums, calling it a tax on the uncertainties of life. “You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for the senior citizens,” Gadkari said in his letter dated July 28. Moneycontrol had reviewed the copy of the letter.
INDIA bloc parties too have staged protests in the Parliament to seek a rollback of the 18 per cent Goods and Services Tax (GST) on life and health insurance premiums.
The government has informed Parliament that around Rs 24,000 crore has been collected via GST on health and life insurance in the last three financial years. “Several suggestions have come up and I shall take up with the GST council,” FM Sitharaman said before the Parliament during the discussion on amendments to the Finance Bill.
Finance Minister added that none of House members making demands for GST reduction have asked their respective FMs to reduce the GST on medical and life insurance, when the ball was in their court. “73-74 percent of the amount collected (from health and life premiums) under the GST goes to the states,” FM said.
Former NDA cabinet minister and BJP leader Jayant Sinha, one of the architects of GST, had told Moneycontrol that the standing committee on finance for the 17th Lok Sabha, which was chaired by Sinha himself, had suggested elimination of tax on health and life insurance. “I chaired the standing committee for five years - when we issued our report for insurance – it was unanimous. Everybody agreed that we should eliminate GST on life and health insurance because there are necessities on modern living,” Sinha said.
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