The GST Council will consider rate re-structuring for health and life insurance premia in its next meeting to be held in November, Finance Minister Nirmala Sitharaman announced here on Monday. The Council has decided to set up a Group of Ministers (GoM) to look at reduction tax rate on life and health insurance. The FM also underlined high revenue collection from online gaming and casinos post last year’s GST Council recommendations.
“A Group of Ministers under convenorship of Deputy Chief Minister of Bihar , Samrat Chaudhary has been constituted to holistically look into the issues pertaining to GST on the life insurance and health insurance. It has been asked to give its report by October end which will be considered by the GST Council in its next meeting in November,” Sitharaman said in a press conference, which was called to give details about recommendations agreed upon during the 54th meeting of GST Council.
As things stand, the GST rate on premia for health insurance, term insurance plans and unit-linked insurance plans, attract 18 per cent GST. On endowment plans, the GST is applied differently. While it is 4.5 per cent for premium paid during the first year, it is 2.25 per cent from the second year. For life insurance in the form of single premium annuity policies, the GST rate is 1.8 per cent. Rates are the same for all age groups and can be reviewed based on the recommendation of the GST Council.
The Council unanimously recommended setting up another Group of Ministers (GoM), to be headed by Minister of State in the Finance Ministry Pankaj Chaudhary, to look into treatment of collections from a cess levied on luxury and sin goods post its sunset date of March 31, 2026. Although the compensation to States ended in June 2022, but levying of cess was extended till March 31, 2026 to ensure repayment of back-to-back loan and interest. This loan was taken to compensate States for revenue shortfall during Covid.
“We expect repayment to be complemented by January 2026. Since, the compensation cess is mandated under the law to be used for repayment of back-to back loan and interest, so a way has to be found for usages after that. Also, what will be the mechanism for such levy, etc has to be considered and GoM will work on all these,” Sitharaman said.
Online Gaming
The FM said a status report was presented on online gaming, casinos and horse racing. Post implementation of clarificatory laws for 28 per cent GST with effect from October 1, there has been significant rise in the collection. Revenue from online gaming surged by 412 per cent to ₹6,909 crore during six month period post imposition of law against ₹1,349 crore during six months prior to October 1, 2023. Similarly during the same period revenue from casinos rose by 30 per cent to ₹214 crore from ₹164.6 crore, the Minister said.
Relief to Foreign Airlines
Meanwhile, the Council recommended exempting import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration. The council also recommended regularising the past period on ‘as is where is’ basis. 10 foreign airlines have been issued notices amounting ₹10,000 crore. However, this recommendation will not be applicable on other sectors and any decision will be taken separately.
