News Brief
GST Council Defers Decision On Insurance Premium Tax Cuts—Here's Why
FM Nirmala Sitharaman (Representative Image)
The Goods and Services Tax (GST) Council on Saturday (21 December) deferred the decision on reducing rates for life and health insurance premiums, owing to some unresolved technical issues.
The GST exemption/reduction on life and health insurance premiums is a long-pending demand of the industry, as the move would alleviate the tax burden on both insurers and policyholders.
GST Council, during its 55th meeting in Jaisalmer chaired by Union Finance Minister Nirmala Sitharaman, has deferred the decision on potential tax changes for insurance premiums, news agency IANS reported citing people in the know.
The Group of Ministers (GoM), headed by Bihar Deputy Chief Minister Samrat Chaudhary, largely advocated for a "full exemption" on health and life insurance premiums.
However, some members proposed reducing the GST rate from the current 18 per cent to 5 per cent.
"Some members said more discussions were required. The GoM will meet in January again," Chaudhary told reporters.
Recommendations by the GoM include exempting GST on premiums for term life insurance policies and health insurance premiums paid by senior citizens.
Policies exceeding this limit would continue to attract the 18 per cent GST rate.
The GST Council will go for further deliberation on the recommendations in its next meeting, as some more technicalities need to be ironed out.
Meanwhile, the GoM on GST compensation cess is expected to get a six-month extension, pushing the report deadline to June 2025.
A key agenda item at the meeting involves determining if the 5 per cent GST on delivery charges by food delivery platforms should be applied retroactively from 2022.
At present, these companies are not charged GST on delivery fees. The Council is also expected to discuss the inclusion of aviation turbine fuel under GST.
