What GST Council has decided on demands of tax cuts in health insurance premiums | Details
There has been a widespread demand to remove the 18 per cent GST on health insurance premiums so that the extra burden is not imposed on the insured, thereby increasing the ambit of coverage.
The GST Council on Monday set up a new Group of Ministers (GOM) on rate reduction on medical health insurance, Finance Minister Nirmala Sitharaman announced. FM Sitharaman confirmed the development during a press conference after the GST Council Metting. She said, "2 new GoMs (Group of Ministers) have been decided. One is on the medical and health insurance."
What will GoM on medical health insurance do?
The medical health insurance GoM which has been set up is essentially the already established GoM on rate rationalisation, headed by the Deputy Chief Minister of Bihar Samrat Chaudhary. However, Sitharaman said that new members will be added to the GoM, specifically for medical insurance.
The GoM will have to make deliberations on the demands of removing GST on medical health insurance and submit its report by the end of October. Nirmala Sitharaman said that in nearly one and half months the GoM will have tyo submit the report so that the decision can be taken on the matter in the November meeting. Apparaently, the health insurance comes under the 18 per cent slab currently.
Why issue referred to GoM?
Regarding the need to refer the matter to GoM, Nirmala Sitharaman said that the decision was taken because there was an elaborate discussion in the meeting and it was found that there is more that needs to be discussed. She said, "Issue like many RWA asked what if they do group insurance for the residents, what if companies do group insurance, what happens to senior citizens, what happens to life insurance as supposed to term insurance." Moreover, she added that there were many requests on mental health situations. These all aspects needs to be considered thoroughly before taking any decision.
How GST cuts in health insurance premium became an issue?
The issue of taxation of insurance premiums had figured in Parliament discussions with Opposition members demanding that health and life insurance premiums be exempt from the GST. However, Sitharaman in her reply to a discussion on the Finance Bill had said that 75 per cent of the GST collected goes to states and the Opposition members should ask their state finance ministers to bring the proposal at the GST Council.
Even Union Transport Minister Nitin Gadkari wrote to Sitharaman on the issue, emphasising the need for deductions. He urged to remove the 18 per cent GST on life and medical insurance premiums. He argued that this tax burdened the uncertainties of life and hindered the sector’s development.
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