GST likely to be reduced on health and life insurance premiums: Report

The rate of goods and service tax paid on health and life insurance is likely to be reduced, according to a report. The government has collected nearly 24,000 crore as GST from the health and life insurance segment in the last three years.

Written By Anubhav Mukherjee
Published8 Aug 2024, 08:38 PM IST
According to the government, nearly  <span class='webrupee'>₹</span>24,000 crore has been collected as GST from the health and life insurance segment in the last three years.
According to the government, nearly ₹24,000 crore has been collected as GST from the health and life insurance segment in the last three years.(MINT_PRINT)

The rate of goods and service tax (GST) paid on health and life insurance is likely to be reduced, CNBC-Awaaz reported on Thursday, August 8, citing people aware of the development. A proposal has been sent to the GST rationalisation committee, as per the news channel.

Also Read | States should propose removal of GST on insurance at Council meet: Sitharaman

The proposal sent to the GST rationalisation committee entails a 5 per cent GST on health and life insurance premium payments; this is significantly lower than the 18 per cent GST applied currently, according to the sources quoted in the report. However, the committee is not in favour of the exemption of GST on premiums, as per the report.

HDFC Life Insurance, Life Insurance Corporation, SBI Life, and ICICI Prudential shares reacted well to the news report. 

Mint could not independently verify this development. 

The GST rate rationalisation committee is scheduled to meet on August 22, as per the report.

Also Read | Centre likely to accept Infosys’ plea on GST notice

In July, Minister of Road, Transport and Highways Nitin Gadkari wrote to Finance Minister Nirmala Sitharaman proposing to withdraw the 18 per cent GST on life and medical insurance premiums. According to a Moneycontrol report, he called it a tax on life's uncertainties.

The government has said nearly 24,000 crore has been collected as GST from the health and life insurance segment in the last three years.

“Several suggestions have come up and I shall take up with the GST council,” said Nirmala Sitharaman in response to the topic in Parliament, as per the report.

Also Read | Top Gainers and Losers today on 8 August, 2024: HDFC Life Insurance Company, Tata Motors, LTI Mindtree, Grasim Industries among most active stocks; Check full list here

“Up to 74 per cent of the amount collected (from health and life premiums) under the GST goes to the states,” said Sitharaman, as per the news report, highlighting that none of the ministers wanting to reduce the GST has asked to reduce it at the state level.

“I chaired the standing committee for five years - when we issued our report for insurance – it was unanimous. Everybody agreed that we should eliminate GST on life and health insurance because there are necessities for modern living,” former minister Jayant Sinha, one of the architects for GST, told the news portal.

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First Published:8 Aug 2024, 08:38 PM IST
Business NewsEconomyGST likely to be reduced on health and life insurance premiums: Report

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