GST Council Meeting Outcome: Decisions On Slashing Tax On Insurance Premiums Postponed

The GST Council on Saturday decided to postpone its decision on slashing the tax rate on life and health insurance premiums, citing the need for further deliberations. The decision came after a meeting of the 55th GST Council, chaired by Union Finance Minister Nirmala Sitharaman, which included state finance ministers. Officials indicated that additional technicalities needed to be ironed out before any final decisions could be made.

Bihar Deputy Chief Minister Samrat Chaudhary, who leads the Group of Ministers (GoM) on insurance, confirmed that the GoM would convene another meeting in January to resolve the pending issues. These discussions will focus on the taxation of various insurance policies, including group, individual, and senior citizens' policies.

In its previous meeting in November, the GoM had proposed several key exemptions under the Goods and Services Tax (GST) framework. The proposed changes included exempting premiums paid for term life insurance policies from GST, as well as premiums paid by senior citizens for health insurance. Additionally, the GoM had suggested that health insurance premiums up to Rs 5 lakh, paid by individuals, be exempt from GST. However, it recommended that premiums for policies providing health coverage above Rs 5 lakh continue to be taxed at the standard GST rate of 18 per cent.

Chaudhary emphasised that the GoM needed more time to assess the complexities involved in implementing these proposals, and further consultations were necessary before taking a final call. The postponement means that any potential tax relief for life and health insurance premiums will have to wait until the next meeting of the GoM in the new year, delaying a decision that could have significant implications for the insurance sector and policyholders across the country.