55th GST Council Meeting: Here's What we Know so Far
The GST Council deferred the decision to reduce GST rates on life and health insurance premiums due to state concerns over a potential Rs. 2,500 crore revenue loss
55th GST Council Meeting – Union Finance Minister – Nirmala Sitharaman – GST Council Updates – taxscan
55th GST Council Meeting – Union Finance Minister – Nirmala Sitharaman – GST Council Updates – taxscan
The Union Finance Minister Nirmala Sitharaman chaired the 55th meeting of the GST Council today ( 21st December 2024 ) at Jaisalmer, Rajasthan. According to The Economics Times, the highly anticipated decision on revising GST rates for life and health insurance premiums was deferred yet again, as states failed to reach a consensus citing concerns over revenue losses.
Currently, health insurance, term life insurance, and unit-linked insurance plans ( ULIPs ) are subject to an 18% GST rate. Endowment plans have different applications: 4.5% GST in the first year and 2.25% thereafter. Single-premium annuity life insurance policies carry a GST rate of 1.8%. These rates are applied uniformly across all age groups.
The issue was initially assigned to a Group of Ministers ( GoM ) led by Bihar's Deputy Chief Minister Samrat Chaudhary, which failed to gain the necessary support from states wary of its financial implications.
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The Group of Ministers ( GoM ) on Health Insurance presented recommendations to state and central government revenue officials on December 16, with proposals to ease financial burdens on policyholders.
The GoM had recommended reducing GST rates on term insurance from 18% to 5% and making similar health insurance cuts to ease consumer financial burdens. However, states were reluctant to proceed, given the estimated revenue loss of Rs. 2,500 crore annually.
The Centre and states collectively generated Rs. 16,400 crore in GST revenue from life and health insurance in the 2023-24 fiscal year, a slight dip compared to the previous year. Lowering tax rates would further impact state finances, particularly after the compensation cess, which previously helped bridge revenue shortfalls, was discontinued.
The matter had been reviewed by a Group of Ministers ( GoM ) led by Bihar Deputy Chief Minister Samrat Chaudhary, which recommended the rate reductions. However, the lack of support in today’s meeting led the Council to defer the decision for further deliberation.
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