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In a major relief to policyholders, the GST council has proposed exemption of GST from third party motor insurance policies.
With this, the premium amount across motor insurance policies will be reduced and become more affordable.
The council said, “To exempt GST on the contributions made by general insurance companies from the third-party motor vehicle premiums collected by them to the Motor Vehicle Accident Fund, constituted under section 164B of the Motor Vehicles Act, 1988. This fund is constituted for providing compensation/ cashless treatment to the victims of road accidents including hit and run cases.”
The 55th GST Council meet in Delhi has deferred potential GST tax cuts on health and life insurance policies.
In a press conference, the Finance Minister Nirmala Sitharaman said that the Group of Ministers (GoM) are awaiting inputs from IRDAI before making its decision, saying, "IRDAI, the insurance regulatory and development authorities inputs have not come, so the GoM felt that it needed a bit more time."
Samrat Chaudhary, finance minister of Bihar and convenor of the GoM, said "Whether it is group insurance, individual insurance, senior citizenship, senior citizens, we will do one more talk." He also added that the next discussion would take place in January.
However, the council has removed the GST component from the third-party motor premium payments to make motor insurance more affordable.