Centre Reiterated that GST on COVID-19 Medicines Capped at 5%

The Union Minister of State for Finance Pankaj Chaudhary replied to questions on GST on COVID-19 medicines & health insurance premiums during Lok Sabha’s question hour. Excerpts from his answers are as below:

  1. COVID-19 medicines and instruments have been sold at 5% Goods & Services Tax (GST), and other medicines have been sold at a range of 5%-12% GST ever since the pandemic started.
  2. The decisions on GST rate rationalisation and exemptions on all services, including health insurance premiums, will be taken on Council’s recommendations.
  3. The GST Council is a constitutional body comprising Union Finance Ministers and ministers representing state/Union Territory governments.
  4. Presently, health insurance services attract 18% GST. However, specific health insurance schemes designed for the needs of economically weaker sections of the society and differently-abled, such as the Universal Health Insurance Scheme, Rashtriya Swasthya Bima Yojana (RSBY), Niramaya Health Insurance Scheme and Jan Argoya Bima Policy, are fully exempt from GST.
  5. The Council received representations to reduce the GST on health insurance in its 31st meeting held on 22nd December 2018 and 37th meeting held on 20th September 2019.
  6. However, the Council did not recommend the rate reduction as the 18% GST rate on health insurance is as per international standards and similar to pre-GST tax rates.
  7. The Central Government manages 66% of government-sponsored health insurance schemes in India.
  8. Senior citizens can avail of a tax rebate of up to Rs 1 lakh on health insurance policies.
  9. Most healthcare services are exempt from the GST, with few exceptions.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in.

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