‘Health, reinsurance premia fetched ₹24,500 cr in GST over 3 years till FY24’

New Delhi, August 5, 2024

While an individual pays GST for health insurance, companies pay for health re-insurance

The Union government collected over ₹24,500 crore through GST on health insurance and reinsurance premium in the last three years, Finance Ministry data showed on Monday. This will further push the demand for lowering GST on health insurance.

GST on health insurance and re-insurance premium is 18 per cent. However, schemes such as Rashtriya Swasthya Bima Yojana (RSBY), Universal Health Insurance Scheme, Jan Argoya Bima Policy and Niramaya Health Insurance Scheme do not attract GST.

In a written response, Minister of State in the Finance Ministry Pankaj Chaudhary presented the collection data which showed that GST collection (cash) from health insurance premium from FY22 to FY24 was over ₹21,000 crore, while that from health reinsurance premium was around ₹1,500 crore. While an individual pays GST for health insurance, companies pay for health re-insurance. In both situations, companies deposit the balance — after deducting input tax credit from total tax dues — which is referred to as ‘cash’.

This data has been made public at a time when Road Transport Minister Nitin Gadkari and West Bengal Chief Minister Mamata Banerjee have written to the Finance Minister Nirmala Sitharaman advocating for the removal of GST on not just health insurance but also life insurance. The issue has generated political heat, with the Trinamool Congress (TMC) and DMK pressing the demand in the Lok Sabha and staging a walkout last week.

Any change or withdrawal of GST on a good or service can be recommended by GST Council following which Centre and State Governments issue notifications. It is believed that this issue will also be taken by the Group of State Ministers assigned to suggest ways for GST rate rationalisation.

[The Hindu Business Line]