Why GST Council cannot ignore the health insurance row next week
Health insurance policies attract an 18% GST rate on the total premium paid, the second highest tax slab. However, as premiums see a sharp rise due to medical care becoming more expensive, the government could be forced to reconsider its decision.
When the Goods and Services Tax (GST) Council convenes for its 54th meeting on Monday, one agenda item likely to resurface is the tax slab on health and life insurance. While the Council has previously discussed this issue, it has gained renewed attention recently. The Opposition has intensified its demands, and a senior minister, Nitin Gadkari, highlighted the issue in a letter to the finance minister in July.
Currently, premiums on health insurance policies attract an 18% GST rate, the second-highest tax slab. Prior to the GST regime, the service tax rate on health and life insurance was 15%, which included a basic service tax of 14% and additional Swachh Bharat and Krishi Kalyan cesses of 0.5% each. Over the last three years, premium payments have brought in over Rs.24,500 crore in GST revenue for the Centre, according to finance ministry data.
