GST On Term Life Insurance Premium, Senior Citizens Likely To Be Exempted

10/19/2024 5:15:12 AM

(MENAFN- IANS) New Delhi, Oct 19 (IANS) The Group of Ministers (GoM) on Saturday more or less decided to exempt the goods and services tax (GST) on term life insurance premiums and premiums paid by senior citizens for health cover.

The GST exemption/reduction on life and health insurance is a long-pending demand of the industry as the move would alleviate the tax burden on both insurers and policyholders.

While most of the panel members of the GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, pitched for "full exemption" on health and life policy premiums, a few panel members suggested reducing the rate to 5 per cent from the current 18 per cent.

The ministerial panel, tasked to rationalise rates, is scheduled to submit its recommendation to the GST Council by October 31. The final decision in this regard will be taken by the GST Council when it meets next.

At present, 18 per cent GST is levied on life and health insurance premiums.

The GST Council took up the matter in the September meeting, following the debate over the 18 per cent GST levied on life and health insurance premiums. The panel learnt to have discussed the revenue implication in various options suggested by the Fitment Panel - comprising revenue officials of the Centre and states. Other options discussed during the GoM meeting included exempting premiums paid by senior citizens and premiums with coverage up to Rs 5 lakh, or alternatively, only exempting premiums paid by senior citizens from the GST ambit.

Last month, the GST Council, headed by Finance Minister Nirmala Sitharaman, set up a GoM on slashing the tax rate on life and health insurance, as well as reducing the GST on cancer drugs. The 54th GST Council meeting, held on September 9, reached a“broad consensus” to bring relief to individuals and senior citizens with a decision on the GST applied to health insurance premiums.

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