Business News Desk: There has been a demand for a long time to reduce GST on life insurance and health insurance. Today there is a meeting of the Group of Ministers in Delhi regarding this. This is the first meeting of the GOM on Life and Health Insurance under the chairmanship of the Deputy Chief Minister of Bihar. In this meeting, consideration will be given to excluding life and health insurance from GST or reducing its rate to 5 percent. Let us tell you that at present people have to pay 18 percent GST on health and life insurance.
There will also be a meeting of another group of ministers under the leadership of Chaudhary, which was formed to rationalize GST rates. In this meeting, discussions will be held on reducing the 12 percent slab, bringing more items under the five percent tax net, rationalizing taxes on medical and drug related items, bicycles and bottled water. This group of ministers can also discuss the possibility of merging the rates of 12 and 18 percent. The six-member group will discuss increasing rates on items like aerated water and beverages to compensate for the loss in revenue due to reducing tax rates on items used by common people. Currently, the Goods and Services Tax (GST) has a four-tier tax structure with rates of five, 12, 18 and 28 percent.
How is GST decided?
Under GST, essential goods are either exempted from tax or kept in the lowest slab. Whereas luxury and harmful items are kept in the highest tax slab. Along with this, the GST Council had also constituted a Group of Ministers to explore the possibility of reducing the tax rate on health and life insurance premiums from 18 percent. This group has been asked to submit its report by the end of October. This GoM will suggest the tax rate of health/medical insurance including individual, group, family floater and other medical insurance for various categories like the elderly, middle class and people with mental illness. In the last financial year, the Center and states had collected revenue of Rs 8,262.94 crore by imposing GST on health insurance premiums. Whereas Rs 1,484.36 crore was collected due to GST on health reinsurance premium.
