In a bid to extend relaxation on the Goods and Services Tax (GST) paid on life insurance and health insurance premiums, the GST Council nominated Group of Ministers (GoM) is likely to propose relaxations.

According to sources privy to the discussions at GoM, “Goods and Services Tax (GST) on pure term life insurance premiums, and health insurance of senior citizens are likely to be exempted from current 18% GST.”

The GoM is of the view that pure-term life insurance and pure-term life insurance covering family members should be exempted from GST, sources added.

When it comes to health insurance, “The GoM is likely to propose an exemption on premiums paid for health insurance of senior citizens and for non-senior citizens, the proposal is to exempt GST only for policies with a coverage of ₹5 lakh,” sources added. However, a final report is yet to be submitted to the GST Council.

Sources clarified that for the health insurance policies of above ₹5 lakh cover, the GoM was of a view to continue with the current 18% GST rate. Currently, 18% GST is levied on life insurance premiums paid for term policies and family floater policies. “GoM members are broadly on board for cutting my rates on insurance premiums. A final decision will be taken by the GST Council,” sources said.

Sources told CNBC-TV18 that “As per Fitment Committee recommendations, the exemption for only pure term individual life policies & reinsurers could lead to a Revenue Implication of around ₹213 crore. And on health insurance, the Fitment committee has recommended that exemption of GST on health insurance premiums for senior citizens' and premiums for individuals (non-senior citizens) with cover up to ₹5 lahk could lead to a Revenue Implication of ₹2,100 crore.”

Meanwhile, without disclosing the decision of the GoM, Bihar Deputy Chief Minister Samrat Chaudhary, the convenor of the GoM said, “Every GoM member wants to give relief to people. The special focus is on senior citizens. We will submit a report to the council. A final decision will be taken by the council.”

The GST Council in its meeting on September 9 had decided to set up a 13-member GoM to decide on tax on health and life insurance premiums.

Choudhary is the convenor of the GoM. The panel includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana. The GoM has been mandated to submit its report to the Council by October-end.

Source: CNBC TV 18