GST on health, life insurance on agenda in Monday meeting

Spread the love

GST Council meeting to decide taxation on insurance policies

By Our Special Correspondent

New Delhi, September 5: The GST Council in its meeting will deliberate on the taxation of the health and the life insurance policies. The GST Council will deliberate on taxing insurance products after a massive furor over the 18 per cent taxes on health and life policies.

The GST Council mandated panel is learnt to have come to the four options on the health insurance taxations. On life insurance, there is just one proposal which seeks to exempt term insurance from taxation.

Also Read: Will Arvind Kejriwal win ‘snake & ladder game’?

With political mood against taxing insurance products, indications are that the tax rate could be substantially reduced.

It has been reliably learnt that the Monday meeting of the GST Council will brainstorm on four options. The first option calls for abolishing the GST on health insurance products.

Union Minister for Surface Transport Nitin Gadkari had written a two-page letter to his ministerial colleague Nirmala Sitharaman against high GST on health and life insurance products. Gadkari had used the term “taxing the uncertainties of life” for the high GST on the insurance products.

The second option before the GST Council calls for cutting the tax from 18 per cent to five per cent. The highest GST is of 28 per cent for sin goods.

Also Read: Modi in Singapore talks technology, Indo-Pacific

The 18 per cent GST on insurance policies had also invited Opposition anger in the Budget session of parliament. West Bengal Chief Minister Mamata Banerjee has twice written to Sitharaman on the issue.

Banerjee in her letters demanded that the GST be abolished. Sitharaman in her response in parliament had countered the Opposition, saying if they had questioned their chief ministers on the high GST on insurance products.

An 18 per cent GST translates into a hefty outgo from the pocket of the middle class. A person ends up paying almost ₹5000 extra for a premium of ₹27000. Annual premium of ₹5 lakh coverage invariably comes at a cost over ₹10,000.

Also Read: US recession fear sinks stock markets while defensives gain

At a time when the health cost is exorbitantly high, the middle class in particular is buying health insurance policies in a big number.

The third option before the GST council will be exempting the senior citizens from the taxes in buying the health policies. The fourth option involves exempting GST on premiums paid for health policies.

On life insurance, the GST Council will consider exempting the term insurance policies.

Join WhatsApp channel of The Raisina Hills