Bhatti Seeks Lower GST on Health Insurance

Hyderabad: Deputy Chief Minister and finance minister Mallu Bhatti Vikramarka on Monday urged the Centre to not levy Goods and Services Tax (GST) on research grants or donations received from the government or private agencies, reduce GST on health insurance premium to five per cent from 18 per cent and exempt health insurance of senior citizens from the tax.

Bhatti on Monday was speaking at the 54th meeting of the GST Council chaired by Union finance minister Nirmala Sitaraman in New Delhi along with S.A.M. Rizvi, principal secretary, revenue (commercial taxes and excise).

Bhatti stressed the need for reduction or exemption on health insurance premiums on the grounds that access to quality healthcare of their choice was to be ensured to the middle and lower middle class groups owing to the high medical expenses. He stated that it would be the responsibility of the state government to make health insurance affordable to all.

Since clarity on taxability on group policies, family policies etc., was required, the GST Council constituted a group of ministers (GoM) with a request to submit its recommendations within one month, so that it can be discussed and appropriate decisions can be taken in the next Council meeting. The same GoM would also look into the matter of granting exemption or reduction of GST on life insurance premiums. Bhatti volunteered to be a part of the GoM.

On the issue of compensation cess, Bhatti observed that after discharging the loan amount, it would be appropriate to add the cess component to the SGST component, as the purpose of compensation cess was to strengthen the finances of the states. Further, Bhatti proposed to constitute a GoM to examine this issue, and recommend the future course of action.

On the subject of recovery of excess ad-hoc IGST apportionment made in earlier years, the Deputy Chief Minister informed the GST Council that the ad-hoc apportionment was done to Telangana at 4.02 per cent of the total apportionment (based on the revenues for the FY 2015-16), but it is proposed to recover now at 5.07 per cent based on another formula. Bhatti, therefore, suggested that a Committee of Officers (CoO) be constituted to look into the matter and submit a detailed report for arriving at a formula to make recoveries from the states