- The central government is contemplating a reduction in the GST on health and life insurance premiums from 18%, with ongoing discussions about potential new rates of nil, 5%, or 12%, reflecting differing opinions from state ministers and the insurance industry.
- The insurance sector has proposed a 12% GST rate to enable full input tax credit claims, while some state officials advocate for a 5% rate to mitigate revenue losses for the government. The GST Council has requested recommendations from the Insurance Regulatory and Development Authority of India (IRDAI) for consideration in an upcoming meeting.
- A consensus appears to be forming between the government and insurers on a 12% GST rate, with assurances that any tax reduction will be translated into lower premiums for consumers, as the demand for a GST cut has been driven by India’s low insurance penetration and high out-of-pocket healthcare spending.
Source A2ztaxcorp
