New Delhi: GST rates on health and life insurance premiums may be reduced. Currently, these products attract GST at the rate of 18%. But, the GST Council has widely agreed to reduce this rate. News agency PTI quoted sources as saying that the final decision in this regard will be taken in the next meeting.

The committee of tax officials of the Centre and states (Fitment Committee) presented a report before the GST Council on Monday. It contains data and analysis of GST reduction on life, health and re-insurance premiums. This committee gives necessary suggestions to rationalise the tax rates.

Most states are in favor of tax cuts

The 54th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and in the presence of state ministers, is being held in Delhi. This is the highest body that takes decisions on GST-related matters. In this meeting, most states were in favor of reducing insurance premium rates. In fact, monthly GST collection is continuously increasing. In such a situation, the committee feels that measures can be taken to provide relief to consumers.

If the GST rate is reduced, crores of policyholders will benefit as the premium amount will decrease. Before GST, service tax was levied on insurance premium. When GST was implemented in 2017, service tax was included in GST. In the financial year 2023-24, the central and state governments collected Rs 8,262.94 crore from GST on health insurance premium. At the same time, Rs 1,484.36 crore was collected as GST on health re-insurance premium.

Politics is also heated on insurance premium

The issue of taxing insurance premium was also raised in Parliament. Opposition members demanded the government to exempt health and life insurance premiums from GST. Even Union Minister Nitin Gadkari had written a letter to Sitharaman on the issue of insurance premium. West Bengal Finance Minister Chandrima Bhattacharya had raised the issue of insurance premium in the meeting of the Group of Ministers (GoM) constituted on rationalization of rates last month. After that the matter was sent to the 'Fitment' committee for data analysis.