Centre ready to exempt health and life insurance from GST. Then why is the industry pitching for 12%?

Subscribe to enjoy similar stories. New Delhi: There is unanimity on the need to reduce the goods and services tax (GST) on health and life insurance premia from 18%, but consensus eludes on what the final rate should be: nil, 5% or 12%.

The central government is open to fully exempting health and life insurance premia from the GST, said two persons aware of the development. But the insurance industry, at a meeting with finance ministry officials last week, proposed a 12% as it would allow companies to fully claim credit against GST paid on inputs, the people said, speaking on the condition of anonymity.

Some state ministers, however, are batting for 5%, arguing that would cushion the impact on the exchequer. While a few suggested that insurers should be allowed to set off this liability against the taxes they pay on the services and goods that go into their operations, others did not favour the input tax credit, said the first person cited earlier.

Also read | Govt eyes insurance law revamp: Composite licensing, fair play for PSU insurers Federal indirect tax body GST Council has sought suggestions on GST reduction from the Insurance Regulatory and Development Authority of India (IRDAI), which is expected to place the industry’s view before it. “All the proposals are likely to be placed before the GST Council when it meets next, possibly in May or June, and the council will take the final call," said the first person quoted earlier.

Queries emailed to the finance ministry, GST Council Secretariat and Irdai on Tuesday seeking comments remained unanswered at the time of publishing. There is a broad agreement between the government and insurers to reduce the GST rate on insurance to 12% with input tax credit, according to