Medical and life insurance: Finance minister Nirmala Sitharaman asked Members of Parliament to take the lead in exempting medical and life insurance from the Goods and Services Tax by asking their respective state finance ministers to take up the matter in the GST Council, and also hinted at more income-tax reforms aimed at benefiting the middle class by the next budget.
Replying to a debate on appropriation and finance bills in Rajya Sabha, she said, prior to the launch of the GST regime in 2017 the tax was levied by every state levied on insurance premia. Highlighting the decision-making process of the apex federal body on indirect taxes, Sitharaman said the Council is represented by finance ministers of states, who have two-third say in any matters while the Centre has one-third votes. Her reference was to the service tax on insurance premia that used to be levied pre-GST.
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“Parliament cannot bypass the GST Council,” she said asking MPs to mobilise finance ministers of their respective states to take up the matter at the Council if they genuinely want to exempt GST on insurance premium and help the middle class. “Hon’ble Members, who protested with placards here, I want to ask [them] — did they write letters to their own finance ministers…,” she said asking members to raise the issue in the right forum rather than politicising the issue. “Make sure, the next GST Council meeting takes this up,” she said asking MPs to persuade FMs of their respective states to act in the Council.
Participating in the dabate, TMC MP Derek O’Brien suggested that in the GST Council, if the majority vote was with NDA, then why not the levy has been reduced. To this, the minister said her endeavour was to take all decisions in the Council with consensus. Barring one issue (related to lottery), all decisions of GST Council were taken on the basis of consensus. Health and life insurance premiums attract 18% GST.
Participating in the dabate, TMC MP Derek O’Brien suggested that in the GST Council, if the majority vote was with NDA, then why not the levy has been reduced. To this, the minister said her endeavour was to take all decisions in the Council with consensus. Barring one issue (related to lottery), all decisions of GST Council were taken on the basis of consensus. Health and life insurance premiums attract 18% GST.
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GST rate rationalisation committee, which meets later in August could consider lowering this rate.
After her feisty hour-long reply in the Upper House, the process of parliamentary approval for the Budget 2024-25 was completed and Rajya Sabha returned the relevant finance bills to Lok Sabha. The House also returned the Jammu and Kashmir Appropriation Bill to the Lower House. During her reply, Sitharaman said the budget was aimed at improving the lives of people, facilitating growth and creating employment.
She refuted the Opposition’s charge that the budget was anti-middle class. Addressing the chair, she said: “Sir, compared with very many developed economies, which have actually increased tax rates… Despite pressure from Covid times, we have actually reduced the burden on middle class substantially.” In support of her argument she cited several examples such as revision of tax slab for the new regime, raising standard deduction from ₹50,000 to ₹75,000 under this, and enhancing deduction on family pension for pensioners from ₹15,000 to ₹30,000.
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The finance minister recalled her budget announcement regarding a comprehensive review of the Income-Tax Act, in continuation of the government’s efforts of make tax regime “simpler”, “equitable” and “easy” to comply. She said tax officials have been given a timeframe of six months for the same. “We should have a simplified version which, after due consideration, will obviously be brought to this House and Members will be. briefed on it and the approval will be sought,” she added. Incidentally, the six-month time coincides with the next budget in February 2025, the eighth of Sitharaman .
Sitharaman said the current Budget mark the continuity of government’s economic policies. “The Union Budget this year balances several overriding imperatives, growth, employment generation, capital investment, and fiscal consolidation. We have tried to balance all these without compromising on any one sector.”
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