Life, Health Insurance Premiums:Big GST relief likely

New Delhi: The Union government has decided to constitute a Group of Ministers to look into the GST on premiums of life and health insurance policies.

Stating this after the GST Council meeting, Union Finance Minister Nirmala Sitharaman said the issue was raised by Opposition parties during the last Parliament session. She said while there appears to be a wide consensus among the states on reducing 18 per cent tax levied on health and life insurance policies, the Group of Ministers, to be headed by Bihar Deputy Chief Minister Samrat Choudhary, will study and submit a report in October. The GoM has been asked to submit its report by the end of next month on issues such as levy of GST on policies bought by resident welfare associations. The all-powerful GST Council will take a decision on the issue post-submission of the GoM report, Sitharaman said.

The minister said a separate GoM will look into treatment of collections from a cess levied on luxury and sin goods post its sunset date of March 31, 2026.

Sitharaman said the Council in its meeting decided to cut GST on certain cancer drugs, helicopter rides for pilgrimage to Kedarnath and namkeens. The Council decided to bring down GST to 5 per cent on the transport of passengers by helicopters on seat share basis and to regularize the GST for past period on ‘as is where is' basis. It also clarified that the charter of helicopters will continue to attract 18 per cent GST.

The GST rate on cancer drugs will be reduced from 12 per cent to 5 per cent while on some namkeens to 12 per cent from 18 per cent. The Council also deliberated on the GoM's status report on rate rationalisation and online gaming.

From October 1, 2023, entry-level bets placed on online gaming platforms and casinos were subject to 28 per cent GST.

Prior to that, many online gaming companies were not paying 28 per cent GST arguing that there were differential tax rates for games of skill and games of chance. The GST Council in its meeting in August 2023 had clarified that online gaming platforms were required to pay 28 per cent tax and subsequently Central GST law was amended to make the taxation provision clear. Offshore gaming platforms were also mandated to register with GST authorities and pay taxes, failing which the government would block those sites.