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GST on two wheeler and health insurance premium: Rate cut not on the table yet

GST on two-wheeler and health insurance premium: Rate cut not on the table yet

GST on two-wheeler and health insurance premium: Rate cut not on the table yet
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By Timsy Jaipuria  Oct 8, 2020 2:23:49 PM IST (Published)

It seems the wait for a potential two-wheeler and health insurance GST rate cut is going to stretch longer. People in the know have told CNBC-TV18 that the proposals for the same are yet to be examined by the government.

It seems the wait for a potential two-wheeler and health insurance GST rate cut is going to stretch longer. People in the know have told CNBC-TV18 that the proposals for the same are yet to be examined by the government.

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It was at the end of August when Finance Minister Nirmala Sitharaman while responding to a question at a CII forum about the need for lowering GST rates on 2-wheelers, said “This was indeed a good suggestion as this category is neither a luxury nor a sin good and hence merits a rate revision. Consequently, this will be taken up with the GST Council.”
Since then, the GST council has met twice, first on August 27 and next on October 5.
Similarly, the insurance regulator -- Insurance Regulatory and Development Authority of India (IRDAI), for providing basic financial protection to the people in the country, has been pitching for lowering of the GST on life and health insurance premiums to 5 percent from the current 18 percent.
“Despite restrictions in face-to-face interaction due to the pandemic, the insurance business has been able to perform beyond expectations during the current pandemic, where the digital platforms have made it easier for people to obtain insurance…Understanding the need for giving impetus to insurance sector for providing financial protection during the time of distress, Chairman, IRDAI has suggested for considering lowering of the GST on life and health insurance premiums to 5 percent from the current 18 percent,” sources had told CNBC-TV18, quoting the IRDAI representation to finance ministry.
“The two proposals to cut GST rates on two-wheelers and health insurance premium have not even been tabled before GST council nominated Fitment Committee,” sources updated about the current status.
It is reliably learnt that the upcoming GST Council meet on October 12 will focus only on ironing out the pending issue to raise funds to make good for the shortfall in the compensation cess kitty.
Important to note here is that for any rate cut, the proposal has to be formally made to the Council, post which it gets tabled in front of the GST Fitment Committee, which then examines the proposal, sees the merit, analyses the potential revenue loss or gain and only then it makes a final recommendation to the Council for a discussion and a decision.
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