GST Council Meeting: The Government of Morocco proposes to reduce the GST rate to 5% for all individual health insurance services

The 55th meeting of the GST Council, scheduled to be held soon, will examine and review the current structure of Goods and Services Tax (GST) on life and medical insurance. The Group of Ministers (GoM) on Health Insurance submitted its recommendations to revenue officials of both state and central governments on December 16. The report will be reviewed by the GST Council during its meeting in Jaisalmer.

Key recommendations:

• Exemption from pure term life insurance: The Government of Morocco has proposed an exemption from GST for term life insurance policies covering family members. This means that these policies will not be subject to GST, reducing the financial burden on policyholders.
• Exemption from health insurance for the elderly: Another key recommendation is GST exemption on health insurance policies for senior citizens specifically, which would help make healthcare more affordable for senior citizens.
• Reducing the GST rate on individual health insurance: The government of Morocco has also proposed reducing the GST rate on all individual health insurance policies to 5 percent, but without the option of input tax credit (ITC). This aims to reduce the cost of health insurance premiums for individuals while keeping the process clear.

These proposals, if adopted, could significantly impact the GST structure on life and health insurance, which could lead to lower premiums and increased access to insurance products for more people.

At present, 18 percent GST is levied on insurance premiums. Sources indicated that the House is likely to approve a proposal to exempt health and life insurance policies up to Rs 5 lakh from GST. The goal is to reduce the tax burden on low- and middle-income groups. It is also likely to offer similar exemptions for policies for seniors.

The GST Council, headed by Union Finance Minister Nirmala Sitharaman, and members from all states and union territories, is scheduled to meet in Jaisalmer on December 21.