Life, Health Insurance May See Segmental Benefits Instead Of GST Exemption, Says EY
There’s a need to evaluate the actual benefit of these policy changes for the customer, said EY's Bipin Sapra.
GST rates on life and health insurance policies could get a cut but an exemption was unlikely, according to Bipin Sapra, tax partner, EY. A relief on the current GST rates charged on these insurance policies was expected from the 54th Goods and Services Tax Council meeting held on Sept. 9.
However, the council postponed announcements on the reduction in the GST charged on health insurance premiums to its next meeting, likely to be held in November.
A Group of Ministers has been directed to look into the issues related to the levy of GST on life insurance and health insurance. The GoM will submit a report by the end of October 2024.
“My gut feeling is that rates should go down, I don’t expect exemptions to come in. From the company’s perspective, these insurances which are being taken are not veritable in the hands of the companies. Any group insurance, life insurance or health insurance which the companies gave out, there’s no credit available to them as they are employee expenses. A lower tax also can be passed on easily,” Sapra told NDTV Profit.
While stakeholders are demanding both exemptions and reductions in the GST charged on health and life insurance, there’s a need to evaluate the actual benefit of these policy changes for the customer, he said.
There’s a possibility that the GST Council might also announce a segmental benefit for life insurance and health insurance policies, Sapra said.
“There could be a segmental benefit which could be given. I hope segmental exemptions are not given out because it really impacts the company in terms of compliances,” Sapra said.
The centre and state governments collected Rs 8,262.94 crore through GST on health insurance premiums, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premiums.
The issue of taxation on insurance premiums figured in Parliament discussions with opposition members demanding that health and life insurance premiums be exempt from GST. The demand was also echoed by Transport Minister Nitin Gadkari, who wrote to Finance Minister Nirmala Sitharaman on the issue.
