GST relief for health and life insurance premiums likely
The GST Council has set up three GoMs to look into compensation cess, health and life insurance, and rationalisation of GST rates
A meeting of the Group of Ministers (GoM), set up to review GST on insurance, was also held under the chairmanship of Bihar Deputy Chief Minister Samrat Choudhary.
Following Prime Minister Narendra Modi’s announcement of a Diwali gift through GST rate cuts for the common people, the process of decision-making in this regard has begun.
Also read: Downward GST revisions spark further revenue-cut fears in states
On Wednesday (August 20), the Group of Ministers (GoM) formed by the GST Council met, and Union Finance Minister Nirmala Sitharaman addressed the meeting. This was the first time since the introduction of GST in 2017 that the Finance Minister, who is also the Chairperson of the GST Council, attended a GoM meeting.
GST reforms to strengthen self-reliant India
The GST Council has set up three GoMs to look into compensation cess, health and life insurance, and rationalisation of GST rates.
Also read: FM Sitharaman unveils sweeping GST reform plan to GoMs
Addressing the GoM, Sitharaman said that in order to build a self-reliant India, the Central government has taken a major step forward by proposing the next generation of GST reforms.
GST on health, life insurance premiums may be reduced
The GoM, chaired by Bihar Deputy Chief Minister Samrat Choudhary, discussed the review of GST on insurance. He said the group is in favour of abolishing GST on premiums for health and life insurance to provide relief to individuals and make insurance products more affordable. However, some state ministers have expressed reservations. He added that the GoM will submit its report to the GST Council, which will take the final decision.
The government’s proposal for GST reform is built on three pillars.
Structural reforms: This includes correcting the inverted duty structure to reduce the burden of input tax credit and boost domestic value addition. It also aims to minimise disputes and complexities related to classification and make GST policy stable and predictable, thereby strengthening industry confidence and long-term planning.
Rate rationalisation: The second pillar focuses on simplifying GST rates with the aim of providing relief to the common man, farmers, the middle class, and MSMEs. The idea is to make the tax system simpler, transparent, and growth-oriented, while ensuring that essential and aspirational goods become more affordable, thereby boosting consumption and affordability.
Ease of living: The third pillar is to make life easier. Upcoming reforms will introduce faster, technology-driven registration processes, pre-filled returns to minimise errors and discrepancies, automated and quicker refunds, and measures to support businesses — thus simplifying both ease of living and ease of doing business.
The Central government has assured that in the coming weeks, it will work towards building broad consensus with the states to implement these GST reforms, thereby strengthening the spirit of cooperative federalism.
(This article was originally published in The Federal Desh)
