Your health insurance premium will not become cheaper anytime soon
What's the story
The Goods and Services Tax (GST) Council has deferred its decision on slashing the tax rate on life and health insurance premiums.
The delay gives state finance ministers, along with central and state government officials, more time to deliberate on these changes.
The proposal to reduce GST on life and health insurance premiums has been a long-standing demand of the industry, to ease the tax burden on insurers and policyholders.
Panel discussions
Ministerial panels to further discuss tax rate changes
The GST Council has also deferred a decision on a tax rate overhaul aimed at boosting revenue collection.
This will be discussed by two ministerial panels before recommending changes to the federal indirect tax body.
Bihar's Deputy Chief Minister and convenor of the Group of Ministers (GoM) on insurance Samrat Chaudhary, confirmed their panel had not yet submitted its recommendations to the Council.
Meeting call
Chaudhary calls for additional meeting before final recommendations
Chaudhary said many ministers feel that another meeting is needed before the GoM on insurance submits its final report to the GST Council.
He stressed that all facets of insurance- group, individual and senior citizens' insurance- will be discussed in this meeting.
The convenor also disclosed that the ministerial panel's suggestions on GST rate rationalization weren't placed before the Council.
Decision factors
Factors influencing GST Council's decision on tax hikes
The GST Council's decision on further hikes in the indirect tax system will likely depend on inflation and consumer buying behavior.
In its November meeting, the GoM had recommended exempting term life insurance premiums from GST and a similar exemption for health insurance premiums paid by senior citizens.
They also recommended an exemption for health insurance policies covering up to ₹5 lakh, keeping an 18% GST on policies with higher coverage.
Exemption proposal
GoM members propose 'full exemption' on insurance premiums
During the 55th GST Council meeting in Jaisalmer, Rajasthan, most GoM members led by Chaudhary pushed for a "full exemption" on health and life insurance policy premiums.
However, some recommended slashing the rate to 5% from the current 18%.
Chaudhary told reporters that further discussions were required and that the GoM will meet again in January for the same.