GoM Weighs GST Exemption On Life And Health Insurance Premiums

A group of ministers has begun deliberations on a proposal to exempt life and health insurance premiums from goods and services tax, sources told NDTV Profit.

The Centre has proposed scrapping the existing 18% GST levied on insurance premiums paid by individuals. The measure is aimed at making insurance products more affordable and boosting penetration.

Talking to reporters on Wednesday, Bihar Deputy Chief Minister Samrat Choudhary confirmed that some states had expressed concerns.

The issue will ultimately be placed before the GST Council, which will take the final call, people in the know told NDTV Profit. They added that the GoM meeting focused primarily on tax relief for life and health insurance policies.

This comes after Finance Minister Nirmala Sitharaman presented to the GoMs her government's plans for sweeping reforms in the GST regime that involves slashing tax rates and easing compliance burden for businesses.

The GoMs on rate rationalisation, insurance taxation and compensation cess will over two days deliberate on the Centre's 'next-gen' GST reforms, under which tax will be levied at 5% and 18% rates. A special 40% rate has been proposed on five-seven items, including sin goods.

GST is currently levied at 5%, 12%, 18% and 28%. While food and essential items are either at nil or 5%, luxury and demerit goods are at 28% slab, with a cess on top of it.