GST Council to Consider Tax Exemption for Term Insurance Premiums in December Meeting
New Delhi, November 15: The upcoming GST Council meeting on December 21 is expected to deliberate on granting tax exemptions for term life insurance premiums. The 55th meeting of the council will be held in Jaisalmer, Rajasthan, and will be chaired by Union Finance Minister Nirmala Sitharaman, alongside finance ministers from various states. Originally scheduled for November, the meeting was rescheduled to December.
Key Agenda Items
The meeting will address several significant issues, including recommendations from the Group of Ministers (GoM) on health and life insurance. The GoM has proposed GST exemptions for term life insurance premiums and health insurance premiums for senior citizens. If approved, GST exemptions could be applied to health insurance premiums for coverage up to INR 5 lakh. Policies with coverage exceeding INR 5 lakh would continue to attract GST at the existing rates.
Proposed GST Rate Adjustments
The council is also expected to discuss reducing the GST rate on commonly used items from 12 percent to 5 percent. This move follows a GoM report submitted earlier this year, suggesting adjustments to tax rates on essential goods and services. Experts anticipate that the council may consider reducing the current four tax slabs (5 percent, 12 percent, 18 percent, and 28 percent) to three, simplifying the GST structure.
Input for Union Budget 2024
State finance ministers will also present their recommendations for the Union Budget 2024, scheduled to be tabled on February 1. The meeting will play a crucial role in shaping policy changes and addressing state-level concerns.
Current GST Framework
Currently, GST collections are categorized into four slabs: 5 percent, 12 percent, 18 percent, and 28 percent. Essential items are often taxed at the lowest slab or are exempted, while luxury goods attract higher rates. Calls for a review of the tax structure have gained momentum, with stakeholders urging the government to simplify the framework and reduce the number of tax slabs.
The December meeting is expected to yield decisions that could significantly impact taxpayers and businesses, particularly in the insurance sector.
