Excl: Insurance cos flag cost concerns in GST transition; CBIC asks firms to first pass on benefits

Representatives from insurance companies and the Insurance Regulatory and Development Authority of India (IRDAI) met senior officials of the Central Board of Indirect Taxes and Customs (CBIC) on Friday (September 12) to discuss the transition to the new Goods and Services Tax (GST) regime on life and health insurance. The meeting at the North Block was chaired by CBIC Chairman Sanjay Kumar Agarwal, sources told CNBC-TV18.

According to people in the know, CBIC directed insurers to ensure that the benefits of the GST rate cut— from the earlier 18% to exempt—for life and health insurance are passed on to policyholders by reducing premiums.

At the meeting, insurers raised concerns that the denial of Input Tax Credit (ITC) and inversion benefits would add to their costs, potentially leading to a rise in premium charges. Sources said CBIC responded by advising companies to first pass on the benefits of the rate cuts and, if required, take up the issue of premium hikes later with the relevant authorities.

Also Read: CBIC to meet insurers, IRDAI today to ensure GST exemption benefits reach consumers

Insurers also pressed for the fast-track clearance of ITC refunds currently stuck in the system, and sought clarity on the definition of individual policies, group policies, and family floater plans to avoid ambiguity while implementing the revised rates, sources added.

Sources further revealed that CBIC categorically stated that ITC and inversion benefits on life and health insurance cannot be permitted, as the GST Council has already taken a decision on the matter. At the same time, officials assured that refunds currently in the pipeline would be released in a timely manner.

To address compliance concerns, CBIC informed the industry that a clarification on the definition of policy categories—individual, group and floater— would be issued soon, sources said. This meeting is part of the government’s wider effort to engage with industry stakeholders to ensure a smooth transition following the rollout of revised GST rates.

Also Read: GST rate changes: CBIC clarifies transition, relabelling, refunds, and benefits