insurance on premium
Lakhs of people in the country who buy insurance can get a big gift today. In fact, today there is a meeting of two Groups of Ministers (GOM) formed to give suggestions on reducing GST rates on health and life insurance. This will be the first meeting of the GOM constituted to reduce the rates on health and life insurance premiums. The Group of Ministers led by Bihar Deputy Chief Minister Samrat Chaudhary will suggest reducing the tax rate on insurance premium from 18 percent. There is a demand to reduce GST on insurance premium from 18% to 5%. Union Road Transport and Highways Minister Nitin Gadkari had also asked Finance Minister Nirmala Sitharaman to reduce the 18 percent Goods and Services Tax (GST) on life and medical insurance premiums. It is expected that the government can provide relief to lakhs of people and accept the demand of reducing GST on insurance premium.
Discussion on bringing more items in the 5% slab
There will also be a meeting of another Group of Ministers headed by 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 raising 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 5, 12, 18 and 28 percent.
Report will have to be submitted by the end of October
Under GST, essential goods are either exempted from tax or placed 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 premium 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.
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