The contentious situation of levying items and companies tax (GST) on the fee of 18% on insurance coverage is anticipated to be taken up by the GST Council in its assembly subsequent week however there stay questions on whether or not there might be a straightforward determination on the problem.
Based on sources, one of many choices earlier than the GST Council is to exempt pure time period and medical insurance merchandise from GST. This is among the proposals by the fitment committee of the GST Council. Another choice is to decrease the charges to five%.
Nonetheless, income loss is a big consideration for states and the problem is more likely to be in for some dialogue, sources have indicated. The proposal is anticipated to be taken up on the GST Council assembly on September 9 and the choice must be taken by states.
“Insurance coverage has all the time attracted tax — at the very least for the final 30 years. Even earlier than GST was launched, service tax was levied on insurance coverage. Why is that this situation being debated now,” senior officers have identified.
The 18% GST on insurance coverage has been extensively debated on social media in current weeks. INDIA bloc MPs had additionally held a protest over the tax and had known as for a rollback. Union Minister for Highway Transport and Highways Nitin Gadkari had additionally written to Finance Minister Nirmala Sitharaman in search of a withdrawal of the levy.
Sandeep Pareek, Associate, Oblique Tax, BDO India, identified that a number of stakeholders, together with sitting ministers, have requested for exempting GST on time period insurance coverage in addition to medical insurance. “It’s doubtless that the GST Council might favourably take into account this demand of the trade, particularly if the income loss, because of grant of such exemption, is just not main,” he stated.
Nonetheless, to permit the complete impact of exemption from GST to be handed on to the general public at giant, the insurance coverage corporations would additionally must be allowed full enter tax credit score, with out requiring a reversal of credit score because of exemption from GST on time period insurance coverage, he identified.
In a current reply to Parliament, the Centre had famous that about Rs 24,000 crore was collected from GST on well being and life insurance coverage within the final three monetary years. One other Rs 3,274 crore was collected from the reissuance of well being insurance policies.
