Addressing the country from the ramparts of the Red Fort on the occasion of 79th Independence Day, Prime Minister Narendra Modi promised “Next Generation GST Reforms” in the next few months.
The PM has promised that the upcoming Diwali season will bring great news for consumers. He hinted at preparations to cut GST rates. However, he did not clarify on which goods and services this relief will be given.
The Prime Minister said that the GST Council has been directed to take concrete steps to provide relief to consumers. He said that this step will also benefit small and medium industries.
Hope for relief in insurance sector
It is expected that the insurance sector might see a major GST rate overhauling. Currently, an 18% GST is levied on life insurance and health insurance policies, making the premiums expensive and causing people to hesitate before buying insurance. Industry and consumer organisations advocate for reducing the tax from 18% to 5%, making insurance more accessible.
Insurance companies and insurance customers are keenly awaiting the decision on GST rates on life and health insurance policies. The GST Council is expected to take up the matter in its upcoming meeting. The argument is that by reducing the tax on health insurance, more people will buy insurance, which will not only save the common people from medical expenses, but will also reduce the burden of health services on the government.
Vivek Jalan – Partner Tax Connect Advisory Services LLP, said, “The GST Council has not met since last eight months as a massive exercise for Rate Rationalisation is underway and a Group of Ministers (GoM) are reviewing the comprehensive Rate Rationalisation program. It is learnt that the GoM has not submitted its report as of now and are taking into consideration all representations of Industry associations.”
Which sectors are in focus in the coming months?
According to sources, apart from insurance, sectors like automobile, real estate, hotels and tourism are also expecting relief in the GST Council meetings to be held in the next few months. Industry organisations say that the reduction in GST rates will increase demand in these sectors and give impetus to the economy.
Experts believe that if a decision is taken to reduce GST on insurance, it will be a major social and economic reform, as it will help in “increasing the scope of insurance”, which is still very low in India.
Now eyes on the decision of the GST Council
However, the real picture will be clear in the coming weeks when this issue will be discussed in the GST Council meeting. If this promise of PM Modi reaches the insurance sector, then it will really be a big relief for the general public in the coming festival season.