Following criticism from the West Bengal government, the proposed GST reduction on medical insurance has been deferred and it has been referred to a Group of Ministers for further review.
After the GST Council meeting, West Bengal Finance Minister Chandrima Bhattacharya stated that she had advocated for a full exemption of GST on health insurance. She noted that some ministers agreed on a reduction but from 18% to 5%. A Group of Ministers (GoM) has been constituted to review the matter and will report by the end of October.
Punjab Finance Minister Harpal Singh Cheema reported that the proposal to cut the GST on iron and steel to 5% was not approved and is left pending. This issue will be addressed in the next meeting.
Upcoming Meeting Expected to Cut GST on Health Insurance Premiums
This crucial meeting, expected to happen on Monday, will likely provide big relief for individuals and senior citizens by cutting the Goods and Services Tax rate imposed on premium paid for health insurance. Presently, the levy of GST on premium paid for life and health insurance policies is 18 per cent, for which a proposal is expected to be discussed in the meeting chaired by Finance Minister Nirmala Sitharaman.
Possible GST Rate Cut On Health Insurance Premiums
The GST Council may slash the GST on health insurance premium to nil from the current 18 per cent. This will be a big bonanza to the policyholders, particularly the senior citizens. The pros and cons of the reduction were discussed by a fitment committee comprising of central and state tax officials on Sunday. However, the existing 18 per cent GST on group health insurance premiums are unlikely to change.
Proposal To Levy Tax On Online Payment Above Rs 2,000
The council will also discuss a new proposal to impose tax on online payments of above Rs 2,000. As of now, such transactions via payment gateways attract no GST. This comes as part of the council’s big game plan to broaden the revenue base and establish order in the digital transactional ecosystem under the GST regime.
Rate Rationalisation: GoM Review
Last July, the GoM on GST rate rationalisation, headed by Bihar Deputy CM Samrat Chaudhary, examined several proposals, including one relating to reducing GST on health insurance. It was West Bengal Finance Minister Chandrima Bhattacharya who had earlier written a formal letter for reducing the GST on life and health insurance premiums, and it is under active consideration of the GST Council.
Previous Key Decisions Of GST Council
The previous month’s meeting held in June was attended by the GST Council to integrate Aadhaar biometric authentication and exempt railway services. These have been ongoing initiatives by the council to gradually make the GST structure simpler and more hassle-free for businesses just as much as consumers.
Such a decision to cut GST levied on health insurance would come as much-needed financial respite to millions of policyholders in India. Though the deliberations have been kept for Monday, there is keenness among individuals and the insurance industry over the verdict by the council, which may hugely affect the affordability of premiums and policies regarding taxation in the future.
