GST on insurance premiums:
Karnataka in favour of exemption on products used by working class
Sep 3, 2024
Synopsis
Karnataka will propose a GST exemption on health and life insurance for the working and lower middle classes at the upcoming GST Council meeting. The state opposes a blanket exemption for higher income groups. The council will consider opinions from member states on this issue, aiming to support the struggling working class.
Karnataka is expected to pitch for GST exemption on health and life insurance only on such products used by the working and lower middle classes at the upcoming GST Council meeting.
The Congress-ruled state is not in favour of a blanket exemption on premium insurance products bought by the higher income groups, according to Krishna Byre Gowda, the state’s revenue minister who represents the southern state on the GST Council.
“We are open to the issue,” he told ET, responding to queries on demands for the removal of 18% GST on life and health insurance premium. “We will suggest health and life insurance, which are more of a working class and lower middle class issue, should be looked at positively, regardless of revenue considerations,” Gowda said.
“Life insurance and health insurance that apply to these classes, we should make them affordable.”
The minister said he will ask for segregated data on the type of products used by different classes of people. “We need segregated data. How much of the insurance market is being consumed by the working class. Which health and insurance products are used by these classes. There are some caps in the income tax regulations, and we may also have to look at the same policy,” Gowda said, while adding that the Sep 9 meeting of the GST Council is expected to hear opinions of member states and take a view on this.
“The working class in India is struggling. There has been a stagnation in their real income, as highlighted by the IMF. Hence we have to look positively at supporting the working class,” the minister said.
Demands for revisiting the GST on insurance premiums gained momentum after the Road Transport and Highways Minister Nitin Gadkari wrote a letter on July 28 arguing for their withdrawal while backing the concerns of unions of the PSU insurance companies. A week later, INDI alliance MPs led by AICC leader Rahul Gandhi held a protest demonstration at the Parliament complex demanding removal of GST on insurance premiums, calling the impost ‘inhuman.’
According to the official data, in 2023-24 alone, the governments collected Rs 9746 crore from the GST on health insurance premium. In the previous year, just five states of Maharashtra, Karnataka, Tamil Nadu, Gujarat, and Delhi together accounted for about 64% of the total health insurance premium collected, according to reports.
[The Economic Times]
