In the GST Council meeting, there will be a big blow to the common man's pocket, health and life insurance premiums will not reduce, stock market will also be affected.

New Delhi. The proposal to reduce tax on health and life insurance premium in the 55th meeting of the GST Council has been postponed for the time being. The Group of Ministers (GOM) had suggested a cut in GST rates on health and life insurance premiums, but the final decision on this has been postponed till the next meeting.

What is the current situation?

Currently, 18% GST is applicable on health insurance, term life insurance and unit-linked insurance plans (ULIP). Whereas, for endowment plan, GST is charged at the rate of 4.5% in the first year and 2.25% thereafter. 1.8% GST is applicable on single premium annuity policies of life insurance. These rates apply equally to all age groups.

Union Minister for Finance and Corporate Affairs Smt. @nsitharaman chairs the 55th meeting of the GST Council, in Jaisalmer, Rajasthan, today.

The participants included Union Minister for State for Finance Shri @mppchaudharyChief Ministers of Goa, Haryana, Jammu and Kashmir,… pic.twitter.com/MmuPnigO1g

— Ministry of Finance (@FinMinIndia) December 21, 2024

Why was the decision postponed?

The GST Council pointed out that more clarification and comprehensive reporting is required before reducing rates on health and life insurance premiums. For this, the Group of Ministers has been instructed to present more detailed information in its report. It is clear from this that the government wants to conduct a thorough review before taking any decision on this issue.

What are the recommendations?

1. Exemption on life insurance: It is proposed to provide GST exemption on pure term life insurance policies covering the family.

2. Concession for senior citizens: GST exemption on health insurance policies for the elderly has been suggested.

3. Tax cut on personal health insurance: It has been proposed to reduce the GST rate on personal health insurance from 18% to 5%, although there will be no option for input tax credit (ITC).

An important meeting of the GST Council is going on, this meeting is being held in Jaisalmer, in which many big decisions have been taken, while regarding health insurance, it was believed that there will be exemption in GST but the matter could not be reached in the meeting. The matter has been sent back to GoM for re-study.@AnitaPandeyy #GST… pic.twitter.com/7HJUNjvj5j

— Zee Business (@ZeeBusiness) December 21, 2024

What will happen next?

The final decision on this issue will be taken in the next meeting of the GST Council. For now, people will continue to pay premium as per the old tax rate.