55th GST Council Meeting: Central Govt Considers Removing GST on Health Insurance

Important tax issues discussed at the 55th GST council meeting in Jaisalmer today, including changes to the AAC blocks, fortified rice, and flavor-infused popcorn categories.

Since further clarifications are required, the 55th GST Council meeting has postponed its decision to lower health and life insurance premiums until the following meeting. 

Key Changes Made in GST

• Rate Hike for Used Cars: The GST Council, chaired by Finance Minister Nirmala Sitharaman, approved raising the GST rate on the sale of old and used cars, including electric vehicles, from 12% to 18%, according to sources.

• Simplified Tax on Fortified Rice Kernels: A uniform GST rate of 5% will now apply to all fortified rice kernels, simplifying the tax structure and removing previous complexities related to their intended use.

• GST on Ready-to-Eat Popcorn:

  • Salted or spice-seasoned popcorn, similar to namkeens, will attract 5% GST when sold unpackaged and 12% GST when pre-packaged and labelled.
  • Sugar-coated varieties, such as caramel popcorn, classified as confectionery (HS 1704 90 90), will be taxed at 18% GST.

Next Meet in January

The Group of Ministers (GoM) on insurance will take a look at a few more recommendations before making a decision. According to Bihar Deputy Chief Minister Samrat Chaudhary, it is anticipated that they will meet in January.

Current GST Rates on Insurance

At the moment, an 18 percent GST rate applies to health insurance, term life insurance, and unit-linked insurance plans. Check the current GST rates on health insurance below:

• Health insurance, term life insurance, and unit-linked insurance plans are taxed at 18%.
• Endowment plans have a GST rate of 4.5% in the first year and 2.25% from the second year onward.
• Single-premium life insurance annuity policies attract a GST rate of 1.8%.
  These rates apply uniformly across all age groups.

Revenue officials from the federal and state governments heard the suggestions made by the Group of Ministers (GoM) on Health Insurance On December 16.

Key Suggestions Made by GoM

The Group of Ministers has made many suggestions regarding the tax system of India on health insurance. Check the key suggestions below:

• Pure-term life insurance exemption: The Government of India has suggested exempting family members from paying GST on pure-term life insurance plans. This would lessen the financial burden on policyholders by ensuring that certain insurance are exempt from GST.
• Exemption on senior citizen health insurance: This is another important suggestion that would assist lower the cost of healthcare for the elderly population: the exemption of GST on senior citizen health insurance policies.
• GST rate reduction for individual health insurance: The Government of India has also suggested lowering the GST rate to 5% for all individual health insurance plans, excluding the Input Tax Credit (ITC) option. This would seek to make the procedure simple and reduce the cost of health insurance premiums for consumers.

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