The 54th meeting of the Goods and Services Tax (GST) Council began on 9 September 2024, in Sushma Swaraj Bhawan in New Delhi, chaired by Union Finance Minister Nirmala Sitharaman. The meeting, attended by key financial officials and state finance ministers, is expected to address a number of vital issues, including the possibility of lowering GST rates on health insurance premiums.
According to sources, the GST Council is considering providing major relief to individuals and senior persons by perhaps cutting the GST rate on health insurance premiums. Currently, both health and life insurance policies are subject to the 18 per cent GST. On 8 September, the GST Council's fitment committee, which includes central and state tax officials, assessed the ramifications of cutting this rate. A full study explaining the GST's impact on life, health and reinsurance premiums, as well as its revenue implications, is anticipated to be delivered at the meeting.
The GST Council may lower the GST on individual health insurance premiums to zero, according to sources. However, the 18 per cent GST rate on group health insurance premiums may remain intact. This development is viewed as a key step towards easing the financial load on policyholders.
Along with the health insurance, the GST Council is likely to address other critical issues. Atishi, the head of the Aam Aadmi Party and a Delhi minister, has expressed strong opposition to any GST imposition on research money obtained by educational institutions. She pointed out that the central government has been decreasing research grants while charging an 18 per cent GST on grants that institutions secure independently. "If an institute like IIT Delhi is researching certain types of vehicles, aircraft and medical equipment, then why GST is imposed on it?" Atishi stated.
She also expressed concern about the idea to impose GST on online payments of less than Rs 2,000, warning that such a move could have a severe impact on small enterprises and startups. Atishi emphasised that any GST on health insurance, life insurance or insurance for people with mental illnesses should be vigorously opposed.
Punjab Finance Minister Harpal Singh Cheema shared these concerns, pointing out the need to remove the GST on health insurance. "Delhi and Punjab are on the same page regarding the agenda on Health insurance--whether GST should be imposed on Health Insurance. GST should not be imposed on this...We will speak about scrapping GST on health insurance. The second biggest issue is about research, be it a private or government institution, we oppose GST on them. Research is being done for the country, for its development, so there should be no GST on it," Cheema said.
Nirmala Sitharaman leads the GST Council, which is made up of state finance ministers. The decisions made at this summit may have far-reaching consequences for health insurance policyholders and research institutes across the country.
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