GST Council likely to meet in November after state elections, set to accept GoM report on insurance premium

The GST Council is likely to meet at the end of the month, after Maharashtra and Jharkhand elections, and is set to accept the final report by the Group of Ministers on lower interest rates for life and health insurance premiums.

CNBC-TV18 reported citing sources that the GoM is likely to proposed a GST exemption on premium paid for term insurance for individual as well as for families. This exemption on life insurance premia is likely to have a revenue implication of Rs 213 crore, the source told the channel. On October 19, Moneycontrol too had reported that the likely revenue loss from the exemption of term life insurance from GST is estimated to be around Rs 200 crore annually.

GST exemption is likely to be proposed for all health insurance policies for senior citizens, it is learnt, as well as on health insurance of up to Rs 5 lakh for non-senior citizens. The revenue implication from rationalisation of GST on health insurance premia is seen at Rs 2,100 crore.

Last month, Moneycontrol had reported citing sources the GoM has agreed to propose a GST exemption for health insurance offering coverage up to Rs 5 lakh.

A Fitment Committee, comprising state and central government revenue officials, had been assigned to weigh on potential benefits of exemption against the revenue loss to the exchequer, and make recommendations to the Council.

The Group of Ministers had met in October to discuss GST rates on insurance premium, and have reached a consensus to exempt term life insurance premiums and health insurance for senior citizens from the GST net.

On August 30, Moneycontrol had reported that a proposal from the Group of Ministers (GoM) could recommend exempting term life insurance policies from GST. However, insurance products with investment components may still be taxed. This move aims to increase demand for pure protection policies by making them more affordable for consumers.