New Delhi, Aug 20 (IANS) — The Group of Ministers (GoM) on insurance has recommended a full exemption of GST on individual health and life insurance premiums, a move aimed at making insurance more affordable and improving penetration in India’s underinsured market, Bihar Deputy Chief Minister Samrat Choudhary said on Wednesday.
Choudhary, who is part of the GoM, confirmed that the recommendation will be presented to the GST Council for a final decision after consultations with all states. The GoM meeting, chaired by Finance Minister Nirmala Sitharaman on August 20, saw states divided — while several supported the exemption, others flagged potential revenue losses.
Rajasthan’s GST Council member Gajendra Singh noted that while GST reforms have not significantly hurt state revenues, tax cuts on insurance and items like solar equipment could have financial implications.
Currently, GST operates across four slabs — 5, 12, 18, and 28 per cent — with essentials taxed at the lower end and luxury/sin goods at the higher bracket, along with cess. The Centre’s reform plan seeks to streamline the structure, primarily around 5 and 18 per cent, with a special 40 per cent levy on select sin goods.
Alongside, the GoM on insurance is reviewing tax relief on premiums, while another group is studying the future of compensation cess post-loan repayment. The GST Council, comprising the Centre and states, is expected to deliberate on these proposals next month.
Prime Minister Narendra Modi has indicated that the rollout of the new GST reforms is targeted ahead of Diwali.