GST Exemption: Transition Challenges for Insurance Industry
The GST Council has exempted GST on individual life and health insurance premiums, effective September 22. The CBIC is engaging with the insurance industry to develop a mechanism for handling accumulated input tax credits. Private insurers are concerned about financial impacts due to the ITC reversal.
- Country:
- India
In a significant move, the GST Council has exempted the Goods and Services Tax on premiums for individual life and health insurance policies, starting from September 22. This decision impacts the financial strategies of many insurance companies as they adjust to a new tax framework.
The Central Board of Indirect Taxes and Customs (CBIC) is actively engaging with the insurance sector to iron out a transition plan for handling accumulated input tax credits (ITC) for these newly exempted policies. Finance Minister Nirmala Sitharaman emphasized the need for swift resolution ahead of the effective date, with ongoing discussions aimed at minimizing financial disruption.
Private insurers have aired concerns about the financial implications of the mandatory ITC reversal required by the exemption. The upcoming changes emerge from a larger rate rationalization effort, which introduces tiered taxation for various goods and services, excluding certain luxury items and tobacco products.
(With inputs from agencies.)
ALSO READ
Very confident that industry will pass on GST rate cut benefits to consumers, says Finance Minister Nirmala Sitharaman.
Will personally monitor from September 22 price reduction of goods following GST rate cuts: FM Nirmala Sitharaman to PTI.
Finance Minister Nirmala Sitharaman writes to states expressing gratitude for GST overhaul.
GST overhaul truly a people's reform, will have positive impact on daily lives of all 140 cr Indians: FM Nirmala Sitharaman.
FM Nirmala Sitharaman explains motive of GST reforms, says "focus will be to ensure rates cuts are passed to common people"
Google News