The Goods and Services Tax Council, during its 55th meeting in Jaisalmer, deferred a decision on potential tax changes for insurance premiums, including life and health policies, according to people in the know.
The decision comes amid growing anticipation about whether these essential services would face a revised GST structure.
Insurance premium revision on term life and health policies was one of the major agendas of the meeting. This follows recommendations from a Group of Ministers led by Bihar Deputy Chief Minister Samrat Chaudhary, which had earlier proposed several exemptions.
GST On Insurance: GoM Recommendations
Term Life Insurance Policies: The GoM suggested exemption from GST on premiums paid for term life insurance policies.
Health Insurance for Senior Citizens: It was proposed to exempt GST on premiums paid by senior citizens for health insurance cover.
Health Insurance for Others: For individuals other than senior citizens, an exemption was recommended for health insurance premiums covering policies up to Rs 5 lakh. However, the current 18% GST rate would remain applicable for policies with coverage above Rs 5 lakh.
The Council has opted for further deliberation on the recommendations before taking a final call.
Under the existing structure, both life and health insurance premiums attract an 18% GST, a rate often criticised for discouraging greater adoption of insurance.
GST Recommendations That Weren't Deferred
Popcorn: Savory varieties mixed with salt and spices will attract 5% GST when unpackaged and 12% when pre-packaged and labeled. Sweet versions like caramel popcorn will be taxed at 18% as sugar confectionery.
Fortified Rice Kernels: GST on FRKs is proposed to be reduced from 18% to 5%, regardless of their end use.
Autoclaved Aerated Concrete Blocks: Blocks with over 50% fly ash content will now attract 12% GST, down from 18%.
The meeting, chaired by Union Finance Minister Nirmala Sitharaman, saw in attendance Union Minister Pankaj Chaudhary, Chief Ministers, and Finance Ministers from various states and UTs.
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