States favour Centre's proposal to exempt GST on individual life, health insurance policies
GST
Dated:- 20-8-2025
PTI
New Delhi, Aug 20 (PTI) GST on individual life and health insurance policies is likely to be exempt soon as states on Wednesday favoured the Centre's proposal to bring tax on such premium payments to 'nil' from the current 18 per cent.
Groups of Ministers (GoMs) on Health and Life Insurance, and Compensation Cess met on Wednesday to discuss the Centre's proposal of 'next-gen' GST reforms, aiming at two tax rates of 5 per cent and 18 per cent, along with a special 40 per cent rate on 5-7 items, including sin goods.
Ahead of the GoM meetings, Union Finance Minister Nirmala Sitharaman, in her address, talked about
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lth and life insurance policies.
In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium.
The GST Council, chaired by Sitharaman and comprising all state ministers, is likely to meet next month. Prime Minister Narendra Modi had announced in his Independence Day speech that GST reforms would be a Diwali gift for citizens.
Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said the annual revenue loss for GST relief on insurance is Rs 9,700 crore. “We made it clear that the GST reduction benefit should go to policyholders and not companies. Some mechanism has to be developed so that the rate cut benefit
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ld cost Rs 85,000 crore to the exchequer annually, but will give a Rs 1.98 lakh crore consumption boost to the economy as tax cuts will bring down prices and spur spending.
The GoM on compensation cess also discussed the revenue implications of the cess levy coming to an end. Some states, including Punjab, voiced concern over revenue loss pre and post GST.
“Punjab is losing Rs 21,000 crore every year post GST rollout. The GoM meeting on Wednesday took views of all the states. The GoM has not yet proposed any alternative mechanism when the compensation cess ends. We were informed today that the back-to-back loan will be repaid by October, post which compensation cess will not be levied,” Punjab Finance Minister Harpal Singh Cheema told rep
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