55th GST Council Meeting Focuses on Insurance Premiums; GoM Defers Rate Rationalization

On GST Rate Rationalisation a Group of Ministers (GOM) cannot conclude any suggestions. On November it will have another 55th GST council meeting and seems to focus on GST for insurance premia.

Under the convenorship of Bihar Deputy Chief Minister Samrat Choudhary, it was the second meeting and took place in Goa.

As per the sources, the meeting would discuss GST rates on distinct items like educational ones and textiles however can not end. It is anticipated that the discussion will carry on in the upcoming meeting, and as a result, a report will be compiled for the next 55th GST Council meeting.

The forthcoming meeting would be important as there will be a discussion on GST for distinct sorts of insurance. It is obligated for the committee to finalize its story by the finish of October as FM Nirmala Sitharaman cited on September 9 that the GOM has sought to provide its report by the end of October which would be regarded by the GST council in its subsequent meeting in October.

Currently, health insurance, term insurance plans, and unit-linked insurance plans are subject to an 18 per cent GST rate on their premiums.

On endowment plans, the GST is applied distinctly. It is 4.5% for the paid premium in the first year, and it is 2.25% in the second year. There is a 1.8% GST rate that is applicable for life insurance in the form of a single premium annuity policy.

The rates apply equally to all age groups and may be adjusted according to the GST Council’s recommendations.

The Group of Ministers (GOM) is working on the rate rationalization exercise not only for slab but also in terms of individual items. Till now there are four normal rates tax rate slabs 5, 12, 18, and 28 per cent besides a few special rates such as 0.25 percent (rough or sown diamond) and 3 per cent (gold and silver). A few goods in the 28 per cent slab incur a compensation cess that can reach 22 per cent, resulting in a combined tax rate of 50 per cent.

Last month, Chaudhary held the inaugural meeting of the newly formed GoM, during which most members expressed their support for maintaining the existing structure.

He stated that additional discussions will occur before making a final decision, noting that the group has received input from the restaurants, beverages, and other industries, which will be evaluated, and some will be forwarded to the Fitment Committee.