GST Collection Details for Fiscal Year 2023-24
The Indian government has garnered a substantial ₹8,263 crore from Goods and Services Tax (GST) on health insurance premiums for the fiscal year 2023-24. This revelation was made during a recent session in Parliament. Minister of State for Finance, Pankaj Chaudhary, disclosed that the government has received numerous representations advocating for either an exemption or a reduction in the Tax rate applied to life and health insurance premiums.
Current GST Rate and Exemptions
Since the introduction of GST on July 1, 2017, a standard rate of 18% has been imposed on health insurance premiums. This tax is applicable to most insurance schemes; however, certain schemes designed for economically disadvantaged groups and differently-abled individuals are exempt. These exempt schemes include:
- Rashtriya Swasthya Bima Yojana (RSBY)
- Universal Health Insurance Scheme
- Jan Arogya Bima Policy
- Niramaya Health Insurance Scheme
These exemptions are aimed at providing affordable health insurance coverage to underprivileged segments of the society.
Yearly GST Collections on Health Insurance Premiums
A breakdown of Tax collections on health insurance premiums over the past few years highlights a significant increase:
- 2023-24: ₹8,262.94 crore from health insurance premiums and ₹1,484.36 crore from health reinsurance premiums.
- 2022-23: ₹7,638 crore from health insurance premiums and ₹963 crore from health reinsurance premiums.
- 2021-22: ₹5,354 crore from health insurance premiums and ₹826 crore from health reinsurance premiums.
The figures illustrate a steady rise in Tax revenues from health insurance, reflecting both an increase in premium payments and a broader application of the Tax framework.
Industry Requests for GST Adjustments
The Ministry of Finance has acknowledged requests from the insurance industry for either a reduction in the GST rate or complete exemption from it. These requests stem from concerns that the current Tax rate adds a significant financial burden on policyholders and could impact the affordability of insurance products.
Chaudhary emphasized that GST rates and exemptions are determined based on recommendations from the GST Council. The GST Council is a constitutional body comprising representatives from both the central and state governments, tasked with advising on the appropriate Tax rates and applicable exemptions.
Historical Context of GST on Insurance Services
Before the implementation of Tax, life and health insurance services were subject to service tax. The transition to Tax was aimed at creating a uniform tax structure across the country, but it has faced criticism from various quarters, including the insurance sector.
In response to the industry’s concerns, the government has considered the possibility of revising the Goods & Services Tax rates or expanding the scope of exemptions. However, any changes in the Tax structure would require a consensus within the G S T Council and an evaluation of the potential fiscal impact.
The collection of ₹8,263 crore from Tax on health insurance premiums underscores the significant role that Good & Serives Tax plays in the Indian taxation system. While the government maintains a firm stance on the GST rate for insurance premiums, ongoing discussions and representations from the insurance industry could potentially lead to future adjustments. The Tax Council remains the key body in determining any changes to the current tax rates and exemptions, balancing the need for revenue generation with the goal of making insurance more accessible and affordable for all.
This article was crafted by compiling information from official government reports and statements, as well as industry feedback, to provide a comprehensive overview of the current state of Tax on health insurance premiums in India.
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