Quick Summary
The insurance industry has submitted its recommendations for potential changes to GST rates to the Insurance Regulatory and Development Authority of India (IRDAI). These inputs will be forwarded to the GST Council for consideration. Insurers are lobbying for a reduction in the current 18% GST on ins
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FAQ :
The insurance industry is advocating for a reduction in the current 18% GST rate on insurance premiums, particularly for health and term life policies, while ensuring they can still retain the benefits of input tax credit (ITC).
Input tax credit is crucial for insurers to offset taxes paid on various business procurement expenses. Without it, they argue that long-term premium costs would increase, defeating the purpose of a GST rate cut.
The industry has committed to passing on any GST reductions to policyholders after adjusting for input tax credit, aiming to improve affordability.
A Group of Ministers has proposed exemptions on GST for health insurance premiums for senior citizens and for policies with coverage up to Rs 5 lakh.
The Finance Minister has indicated that suggestions on GST revisions and rate rationalisation will be a key agenda item in the upcoming January GST Council meeting.
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