GST Council Meeting: GoM proposes reducing GST rate to 5% for all individual health insurance services 

The upcoming 55th GST Council meeting will review and revise the current Goods and Services Tax (GST) structure on life and health insurance.On December 16, the Group of Ministers on Health Insurance (Government) presented its recommendations to both the state to revenue officials of central governments.The report will be reviewed by the GST Council in a meeting in Jaisalmer.

Main recommendations:

• Exemption from pure term life insurance. The government has proposed a GST exemption for whole life insurance policies that cover family members.This will mean that these policies will not be subject to GST, reducing the financial burden on policyholders.
• Exemption from health insurance of senior citizens. Another important proposal is to exempt health insurance policies from GST specifically for senior citizens, which will help make healthcare more affordable for the elderly population.
• Reduction in GST rate of individual health insurance. The government has also proposed to reduce the GST rate on all individual health insurance policies to 5 percent, but with no input tax credit (ITC) option. This will aim to reduce the cost of health insurance premiums for individuals while keeping the process simple.

These proposals, if passed, could significantly impact the GST structure on life and health insurance, potentially reducing premiums and increasing access to insurance products for more people.

At present 18 per cent GST is levied on insurance premium.The Council is likely to accept the proposal to exempt health and life insurance policies up to Rs 5 lakh.The aim is to reduce the tax burden on low and middle income groups. It is also likely to provide similar exemptions for policies for senior citizens.

The GST Council, headed by Union Finance Minister Nirmala Sitharaman and with members from all states and union territories, is scheduled to meet in Jaisalmer on December 21.