Govt likely to slash GST on insurance premiums to nil, says report
The government aims to slash Goods and Services Tax (GST) on insurance premiums to 5% or even zero from 18% currently, said a Reuters report citing sources. The proposal is part of the upcoming GST 2.0 blueprint, which aims to simplify the indirect tax structure and reduce the burden on both citizens and businesses.
Insurance company stocks surged up to 5% after the development.
Alongside the cut in GST on insurance, the government is proposing a significant overhaul of the Goods and Services Tax structure. The new regime is expected to operate with two main slabs of 5% and 18%, while introducing a special 40% slab for luxury and sin goods such as alcohol and tobacco. This represents a move away from the existing 12% and 28% slabs, which will be phased out under the new system.
Essential items, including food, medicines, medical devices, stationery, educational products, and daily-use goods like toothbrushes and hair oil, will continue to be either tax-free or taxed at 5%. Middle-class consumption goods such as televisions, air conditioners, and refrigerators are likely to fall into the 18% category. The government has also highlighted automobiles, handicrafts, farm goods, textiles, fertilisers, and renewable energy as sectors receiving special attention in the restructuring process.
