The upcoming 55th GST Council meeting will review and revise the current Goods and Services Tax (GST) structure on life and medical insurance. The Group of Ministers (GoM) on Health Insurance submitted its recommendations to the revenue officers of the state and central governments on December 16. The report will be reviewed by the GST Council in its meeting in Jaisalmer.

Key recommendations:

• Exception for pure life insurance: GoM has proposed GST exemption for pure life insurance policies covering family members. This means that these policies will not be subject to GST, reducing the financial burden on policyholders.
• Exemption from health insurance for seniors: Another important recommendation is GST exemption on health insurance policies especially for senior citizens, which would help make healthcare more affordable for the elderly population.
• Reduction of GST rate on individual health insurance: The GoM has also proposed to reduce the GST rate on all individual health insurance policies to 5 percent, but without the option of input tax credit (ITC). This would reduce the cost of health insurance premiums for people while keeping the process straight.

These proposals, if passed, could have a significant impact on the GST structure in life and health insurance, reducing premiums and increasing accessibility to insurance products for more people.

Currently, GST of 18 percent is levied on the insurance premium. Sources said the Board is likely to approve exemption of health and life insurance policies up to Rs 5 lakh from GST. The aim is to lower the tax burden on low and middle income groups. Similar exemptions are also likely to be provided for senior citizen policies.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and members from all states and union territories, will meet in Jaisalmer on December 21.