Govt proposes to exempt health, life insurance from GST, new reform proposal to be levied at...

The government has proposed two exemptions from its GST tax system. It has suggested excluding life and health insurance premium from GST, Bihar Deputy Chief Minister and convenor of insurance GoM Samrat Choudhary said on Wednesday. Under the current GST system, 18 per cent GST is levied on health and life insurance premium. The Group of Ministers (GoM) on life and health insurance will submit the report of their proposal to the GST Council. Some state finance ministers have also expressed concerns which are included in the report.

What has the government proposed for GST reform?

After the GoM meeting, talking to reporters, Choudhary said, “The Centre's proposal is clear that the insurance sector's individual and family (policies) should be exempt from GST. This has been discussed and the GoM report will be presented to the Council.” He further said, “All members have given their approval for lowering rates. Some states have given their own views.” He then added that the Council will take the final call on rates. Choudhary is the convenor of the 13-member state GoM on health and life insurance.

The Centre's proposal on exempting insurance from GST is part of the upcoming GST reform proposal which also includes new ways of levying goods and services tax at 2 rates- 5 and 18 per cent, based on categorisation of products as merit and standard. The 13-member GoM on health and life insurance was set up in September to suggest tax rates.

The panel, which includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana, has been mandated to submit its report to the GST Council by October end.

In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium.