55th GST Council Meeting: Will Tax Rates on Health and Life Insurance Premiums Be Reduced?

The 55th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman, began on Saturday morning in Jaisalmer, Rajasthan. Several important decisions are expected, including lower tax rates on insurance premiums and the inclusion of aviation turbine fuel (ATF) under the GST regime.

One of the key topics is the tax on insurance products. A Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, recommended in November that GST should be exempted on premiums paid for term life insurance policies. The panel also suggested that senior citizens should be exempt from GST on health insurance premiums. Additionally, it proposed that individuals (other than senior citizens) paying premiums for health insurance policies with coverage up to Rs 5 lakh should also be exempt from GST. However, premiums for policies with coverage over Rs 5 lakh would attract an 18% GST.

A final decision on these insurance tax proposals is expected in the current meeting, with most states supporting lower taxes on premiums.

Another significant proposal comes from the Fitment Committee, which includes central and state officials. It has recommended reducing the tax rate on food delivery platforms from 18% (with input tax credit) to 5% (without input tax credit).

The GST Council, a body of Union and state ministers, is responsible for setting GST rates and deciding which goods and services are taxed under the Goods and Services Tax regime, which was introduced in 2017. The Council is the top decision-making body for any changes to GST rules in India.

In its last meeting in September, the Council made decisions affecting various goods and services, including drugs, snacks, auto parts, and even helicopter passenger transport.