GST Council postpones decision on 18% tax rate for insurance premiums

GST Council meeting: Policyholders will have to wait longer for potential relief from the 18% Goods and Services Tax (GST) on their insurance premiums as the GST Council has deferred its decision on the matter.

The 54th GST Council meeting, initially expected to address a possible reduction in GST rates for health and life insurance, has postponed this discussion. This means that millions of policyholders will continue to face the current 18% GST rate on their premiums, say experts.

Next meeting’s focus

Many had hoped for a GST rate cut to alleviate the financial burden, particularly for senior citizens. The council's delay comes despite growing expectations that the rate might be reduced or even eliminated.

A comprehensive report detailing the impact of GST on life, health, and reinsurance premiums is set to be reviewed by the GST Council in its next meeting. This report will help the council decide whether to lower the GST rate on health insurance premiums.

The fitment committee, which includes both central and state tax officials, had discussed the potential effects of reducing the GST rate. The committee's findings will help determine if such a reduction would benefit policyholders without negatively impacting revenue.

GST on online payments

Aside from health insurance premiums, the GST Council will also address other financial matters, including the taxation of online transactions exceeding Rs 2,000. Currently, online payments through payment gateways are not subject to GST, but this may be reconsidered in future meetings.

Several state representatives, including West Bengal Finance Minister Chandrima Bhattacharya, have advocated for a reduction in the GST rate on insurance premiums due to the financial strain it imposes on individuals. Bihar Deputy Chief Minister Samrat Chaudhary has also acknowledged that changes to GST rates for health insurance are being considered.

The GST Council, led by Finance Minister Nirmala Sitharaman and composed of finance ministers from various states, is tasked with deciding on tax adjustments.