New Delhi. Lakhs of people have got a shock due to non-reduction of GST rate on insurance premium. Now a decision regarding this will be taken in January. Reduction or removal of GST on insurance premium will be discussed in the meeting of the Group of Ministers to be held in January. It is being told that due to lack of consensus in the Group of Ministers regarding GST on insurance premium, the decision on it has been postponed. It is being told that opinion will also be taken from the insurance regulator IRDAI regarding reducing or removing the GST rate on insurance. Now those paying insurance premium will have to wait till January 2025 for GST relief.
Term insurance premium is subject to 18% GST. People also have to pay GST on health insurance etc. Union Minister Nitin Gadkari had also advocated removal of GST from insurance. After this, there was hope that the GST Council could take a decision and the insurers could get relief. While speaking in favor of removal of GST, Nitin Gadkari had also argued that due to GST on premium, many people are not getting insurance.
According to the information, state governments also opposed reducing or removing GST on insurance premium. In such a situation, the GST Council has asked the group of ministers to give their recommendations after further study in this regard. It is being told that due to reduction of GST on insurance premium, there is a possibility of loss of thousands of crores of rupees. Center and states will get Rs 16400 crore from GST on insurance premium in the financial year 2024. It is being said that if it is reduced, there could be a loss of Rs 2600 crore. The Group of Ministers had proposed to reduce health insurance from 18 to 5 percent. There was also a proposal to remove GST on insurance for senior citizens. For those who are not senior citizens, there was a proposal to abolish GST even on insurance up to Rs 5 lakh. It was also proposed to keep term insurance completely out of GST.
