GST: Amidst the uproar over the issue of GST on health insurance premium, the decision to reduce the tax rate has now gone to the GST Council. The GST Council meeting is going to be held on 9th September and only 4 days are left when the decision will be taken on how much tax relief you will get on health insurance. The Fitment Committee has avoided suggesting a sudden reduction in the premium and has suggested several options to the Council and left the final decision to it.
Nitin Gadkari has also made this demand
The GST Council is the highest decision-making body in the new indirect tax system. The issue of GST on individual health insurance premium is quite hot. Opposition parties are already creating a ruckus over this, senior Union Minister Nitin Gadkari, who is a part of the Modi government’s cabinet, has also raised this issue. Recently, he had also written a letter to the Finance Ministry regarding reducing the GST on health insurance premium.
The fitment committee left the decision to the council
The Fitment Committee was considering changes in the GST rate on individual health insurance premiums. This committee comprises revenue officials from both the central and state governments. The committee has suggested various options while leaving the final decision to the GST Council. The committee has also explained in its suggestion what kind of impact can be there on revenue in case the options suggested by it are tried out.
Proposal to reduce GST to 5%
Currently, GST is levied on health insurance premium at the rate of 18%. The Department of Financial Services, Ministry of Finance has proposed to reduce the GST rate to 5% (without input tax credit). If the GST rate on premium is reduced, then it will become cheaper for everyone to take health insurance, as they will have to pay less premium.
The government is earning this much right now
The figures for the financial year 2022-23 show that the total figure of health insurance premium was crossing Rs 90 thousand crore. In the total premium collection of Rs 90,032 crore, the contribution of individual health insurance alone was Rs 35,300 crore. As per the current rate of 18 percent of GST, the government received a revenue of Rs 6,354 crore in the form of tax on this premium collection. Reducing the tax rate may affect this revenue of the government.
Also read: Will insurance become cheaper? Nitin Gadkari wrote a letter to Nirmala Sitharaman, a big decision may be taken
