The decision of goods and services tax on health insurance premiums expected this week

The GOM Group (GOM), responsible for the GST review of the Insurance services in New Delhi on August 20 to study the current tax structure on health insurance and health insurance. The meeting focus is on the evaluation of commodity tax rates and services applied to different insurance categories and considering potential cuts. These include individual health insurance policies, group and family, especially those that meet the needs of the elderly, middle -class families, and individuals with mental illness.

The meeting will also consider tax rates on life insurance products such as term insurance and investment -related plans, as well as reinsurance on these groups.

According to the data collected by the Ministry of Finance, more than 80 percent of the premiums collected from individual health insurance policies come from plans to provide coverage of 10 rupees for Cham. The policies of the elderly citizens contribute to about 18 percent of the total individual insurance premiums.

The sixty -sixth report emphasized the Standing Committee for Finance on the urgent need to rationalize commodity and services tax rates on insurance products. He highlighted that the current commodity tax and services rate of 18 percent in the range and health insurance significantly increases the burden of cost, which makes insurance less within the reach of individuals. The report recommended a reduction in commodity and services tax rates, especially for retail health insurance policies for the elderly, partial insurance plans with coverage of up to 5 rupees of Cham (such as those under PMjay), and life insurance.

Despite repeated appeals over the years, the Commodity and Services Tax Council has so far refrained from reducing these rates. At the meeting of the Thirty -seventh Services and Services Board held in September 2019, the proposal was rejected to reduce the commodity and services tax on pure life insurance from 18 percent to 5 percent. The Council expressed its concerns about the losses of possible revenue and indicated that the actual tax rate on insurance premiums was relatively low, between 1.8 and 4.5 percent. It also warned that exemptions can lead to the credit of the banned input tax (ITC) and increase the challenges of compliance with insurance providers.

Likewise, during a meeting of the forty -fourth commodity and services council in June 2022, requests for removal of goods and services tax and health insurance were rejected again. The Council argued that such exemptions will disrupt the tax structure and lead to successive input taxes. Instead, the Council restricted exemptions to specific postpaid services, while maintaining the current tax rates to insurance to avoid revenue leakage. 55^Y The GST Council at Jaisalmer also heard the proposals but decided to give it more time, so that Gom analyzed it.

Now, the new proposals are considered before the next commodity and services tax council meeting. This exemption includes individual life insurance policies and re -securing them from commodity and services tax. While there are no immediate changes to life -term insurance, GOM may reconsider this at a later stage. On the Health Insurance Front, the proposals suggest that individual policies for the elderly and those that offer coverage of up to 5 Rs of GST, including their reinsurance. In addition, the commodity and services tax rate can be reviewed on insurance policies for persons with mental illness by the contradiction committee, which was directed to the request for inputs from the Ministry of Financial Services.

A final decision on these changes is expected shortly after the GOM meeting, as proposals are likely to be submitted in the next session of the GST Council for approval.