India: GST on health insurance premiums to be reduced? Centre moves one step closer
Healthcare
The central government on Monday (Sep 9) postponed the announcement regarding a potential reduction in theGoods and Services Tax (GST) on health insurance premiums. Chaired by Union Finance Minister Nirmala Sitharaman, the 54th GST Council meeting instead formed a group of ministers (GoM) to examine the issue.
TheGoM will submit its report oninsurance-related matters for senior citizens, life insurance, term insurance and group insurance by October end. Meanwhile, the council is expected to discuss removing GST or reducing it in the November meeting.
On Monday, the Fitment Committee, comprising the centre and state tax officials presented a report giving data andand analysis and implications of GST reduction on life, health and reinsurance premiums.
West Bengal Finance Minister Chandrima Bhattacharya stated that the majority of ministers were in support of reducing GST on insurance premiums.
"The issue of GST on health insurance was raised by me. I said that the full exemption should be given. The Chief Minister of Goa supported me. Many of the ministers were of the view that it has to be reduced," said Bhattacharya after the meeting.
"They were agreeable to reduce but from 18 per cent to 5 per cent. Now, whether it will be exempted or it will be reduced to 5 per cent, GoM has been constituted, which will give its report by October last and then it will be decided in the next meeting."
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In the lead-up to Monday's meeting, reports emerged that the government was planning to do away with the GST on health insurance premiums that had been pinching the common man.At present, premiums for both health and life insurance policies are subject to an 18 per centGST.
Watch |India’s health insurance: Big growth, bigger gaps
Gadkari had urgedCabinet colleague in July
A leaked letter byUnion Minister for Road Transport & Highways Nitin Gadkari, written to Sitharaman, showed that the senior minister was also in favour of doing away with GST on insurance premiums.
"Levying GST on life insurance premium amounts to levying tax on the uncertainties of life," Gadkari said in his letter to Sitharaman, dated July 31.
"The Union feels that the person who covers the risk of life's uncertainties to give some protection to the family should not be levied tax on the premium to purchase cover against this risk."
What else was announced?
Sitharaman announced a reduction in GST rate onspecified cancer drugs from 12 per cent to 5 per cent.
“You would recall that we had slashed customs duties on them and now the GST rate is being reduced from 12 per cent to 5 per centto further reduce cancer treatment costs,” she said.
Additionally, fundsgiven for research to State-affiliated universities, those that have come about under State or Central laws, or those that have obtained Income Tax exemption, can receive research funds both from the publicand private sectors and will be exempt from paying GST.
(With inputs from agencies)