The GST Council on Monday arrived at a broad consensus on reducing GST on health and life insurance premiums from the current 18 per cent, but a final decision would be taken in the next meeting, according to a report, citing sources.
According to a Money Control report, funds given for research to universities established by the law of Centre, state governments, and those who have obtained income tax exemption, will also be exempted from GST.
“Universities and research centers which have been established by a law of the central government. Two, universities and research centers established by a law of the state governments or those which have obtained income tax exemption can receive research funds both from public which is government and from private and they shall not pay GST. They are exempted from paying the GST,” confirmed Finance Minister Nirmala Sitharaman while addressing the media after the meeting on Monday.
Sitharaman said that GST Council has also reduced rate on cancer drugs to 5% from 12% and on namkeen to 12% from 18%.
“GST rates on cancer drugs are also being brought down. It’s being reduced from 12% to 5% in order to further reduce the cost of cancer treatment. Then also decision on Namkeen’s extruded expanded savory food items. GST rate on these is being reduced prospectively, not retrospectively, prospectively from 18 to 12%,” Money Control quoted the finance minister as saying.
On Monday, the Fitment Committee, comprising the Centre and state tax officials, presented a report giving data and analysis and implications of GST reduction on life, health and reinsurance premiums.
“Broad consensus has been reached on GST rate reduction on health and life insurance but modalities would be decided in the next council meeting,” PTI quoted one of the sources as saying.
Emerging out of the meeting, West Bengal Finance Minister Chandrima Bhattacharya said the issue of GST on health insurance was raised by her in the meeting of the GoM on rate rationalisation last month.
“The issue of GST on health insurance was raised by me. I said that the full exemption should be given…The Chief Minister of Goa supported me. Many of the ministers were of the view that it has to be reduced. They were agreeable to reduce but from 18% to 5%. Now, whether it will be exempted or it will be reduced to 5%, GoM has been constituted, which will give its report by October last and then it will be decided in the next meeting…,” said Bhattacharya.
Delhi Finance Minister Atishi said that some opposition states raised the issue that the currently charged 18% premium on health insurance is too high, so there was a consensus in the GST Council that there should be GST reduction.
“But now this issue has been sent to GoM. GoM will examine the entire issue…,” she added.
Atishi said that she is happy that the Centre and the state governments have agreed to not impose GST on educational institutions which get government grants or research grants from any private institution.
“…The Delhi Government, Punjab Government and Aam Aadmi Party have been continuously raising this issue that the educational institutions which get research grants should not be subjected to GST. Imposing GST on it is equal to tax terrorism and we are happy that the Central Government as well as all the state governments agreed to this and it has been decided that now if any educational institution gets any government grant or research grant from any private institution, the GST Council has decided that no GST will be imposed…”
Meanwhile, it was also decided that the GST on helicopter services for pilgrims and tourists will be reduced to 5%, down from the current 18%.
The 54th meeting of the GST council was chaired by Union Finance Minister Nirmala Sitharaman on Monday and comprised state ministers.
Sources said most states were on board with rate reduction as the monthly GST collections are seeing an uptrend providing room for taking taxpayer-friendly measures.
If GST rates are reduced, it would be beneficial for crores of policyholders as the premium would come down.
The monthly gross GST collections have stabilised at around Rs 1.75 lakh crore compared to Rs 90,000 crore in the first year of Goods and Services Tax (GST), introduced on July 1, 2017.
Insurance premiums in the pre-GST regime used to attract service tax.
With the pan-India rollout of GST in 2017, the service tax was subsumed into GST.
In 2023-24, the Centre and states 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 of insurance premiums figured in Parliament discussions with Opposition members demanding that health and life insurance premiums be exempt from the GST. Even Transport Minister Nitin Gadkari wrote to Sitharaman on the issue.
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.
With inputs from agencies
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