The ministerial committee may recommend 5% GST with input tax credit on insurance product term plans. “After resistance from the insurance industry, the fitment panel assisting the GoM has been asked to work on 5% GST with ITC and also work on the revenue impact on it,” said an official aware of the development.
The Group of Ministers (GoM), headed by Bihar Deputy Chief Minister Samrat Choudhary, on Friday asked the Fitment Committee under the Council to examine the tax implication of the proposal, sources told the Economic Times.
Strong opposition to IRDA
The official said the Insurance Regulatory and Development Authority of India (IRDA) has been asked to discuss the pros and cons of the proposal with the industry, which has strongly opposed a blanket exemption, arguing that insurance products would become expensive without input tax credit (ITC) benefits.
Report by the end of this month
The regulator is expected to submit its report by the end of this month, following which the GoM will discuss the matter and submit its recommendations to the GST Council. “IRDAI is working on building a consensus and the GoM will meet again after IRDAI submits its report,” sources said.
What are the objections of the insurance companies
Insurance companies had expressed their objections to IRDAI and Central Board of Indirect Taxes and Customs (CBIC). Insurance companies have expressed their objections by giving a memorandum to IRDAI and Central Board of Indirect Taxes and Customs. The industry has advocated levying 12% GST with ITC for term plans.
“The industry is sceptical about abolition of input tax credit and IRDAI is looking into it,” CBIC chairman Sanjay Agarwal had said in a post-Budget interview to ET earlier this month.
The 13-member group of ministers formed in September 2024 includes Uttar Pradesh Finance Minister Suresh Kumar Khanna , West Bengal Finance Minister Chandrima Bhattacharya, Kerala Finance Minister KN Balagopal, Rajasthan Health Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda and Goa Chief Minister Pramod P Sawant.
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