The Centre has proposed exempting individual life and health insurance policies from GST, Bihar Deputy Chief Minister and convenor of insurance GoM Samrat Choudhary said on Wednesday.
Reducing GST on such insurance policies has been a longstanding demand from Opposition parties, including Bengal's ruling Trinamool.
Currently, health and life insurance premium attracts 18 per cent GST.
The Group of Ministers (GoM) on life and health insurance will submit its report to the GST Council. The report will also include views and concerns expressed by some state finance ministers, he said.
"The Centre's proposal is clear that the individual insurance policies should be exempt from GST. This has been discussed and the GoM report will be presented to the Council," Choudhary told reporters here after the meeting of the GoM.
"All members have given their approval for lowering rates. Some states have given their own views," he said, adding a final call on rates will be taken by the Council.
The Centre's proposal on insurance is part of the overall next-Gen GST reform proposal under which goods and services tax will be levied at 2 rates-- 5 and 18 per cent -- based on categorisation of products as merit and standard.
In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium.
Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said the annual revenue loss for GST relief on insurance is Rs 9,700 crore. "We made it clear that the GST reduction benefit should go to policyholders and not companies. Some mechanism has to be developed so that the rate cut benefit reaches the people. The GST Council will decide a mechanism."
The six-member GoM on GST rate rationalisation, chaired by Samrat Choudhary, will meet on Thursday to discuss the rate and slab rejig proposal placed by the Centre.