Taxguide (sunayana)

🤟*GST Reforms & Insurance – Customer Q&A*

❓*1. Has GST been removed on health and life insurance premiums?*
✅ _Yes. From 22 September 2025, GST on individual health and life insurance premiums is reduced from 18% to 0% (Nil)._

❓*2. Does this apply to both new and renewal policies?*
✅ _Yes. The exemption applies to new policies and renewals due on or after 22 September 2025._

❓*3. What about premiums already paid before September 22?*
✅ _If you paid premiums before 22 Sept (including GST), no refunds will be given. The benefit starts only after that date._

❓*4. Do grace period renewals get GST exemption?*
✅ _No. Grace period payments before Sept 22 will not qualify. Only premiums due on or after 22 Sept are GST-free._

❓*5. How much can I save due to GST removal?*
✅ _Customers will save up to 18% on premiums. Example: A policy renewal of ₹1,18,000 earlier now costs only ₹1,00,000._

❓*6. Does this reform cover all types of policies?*
✅ _Yes. It covers individual health policies, life policies (term, ULIP, endowment), and family floater/senior citizen plans. Even reinsurance for such policies is exempt._

❓*7. Will insurance companies reduce premiums immediately?*
✅ _The GST portion will drop automatically. The base premium remains unchanged, but the total payable amount will be lower._

❓*8. Does this exemption also cover group insurance?*
✅ _As of now, the GST Council decision specifically mentions individual health and life insurance. Group products may not get the same benefit._

❓*9. What does this mean for the common man?*
✅ _Insurance becomes more affordable, boosting coverage for middle-class families. Healthcare costs overall will also reduce, giving double benefit._

❓*10. Will existing policy terms and conditions change due to GST reform?*
✅ _No. Only the premium amount (final payable) changes. Policy terms, coverage, benefits remain the same._

❓*11. Are top-up and super-top-up health plans also covered?*
✅ _Yes. Since they are individual health products, they also fall under 0% GST after 22 Sept 2025_

❓*12. What about premiums paid through EMI or monthly mode?*
✅ _GST exemption applies to all payment modes – annual, half-yearly, quarterly, or monthly – as long as the due date is on/after 22 Sept._

❓*13. Does GST removal reduce corporate tax benefits on insurance?*
✅ _No. Tax benefits under Section 80C (Life) and 80D (Health) remain unchanged. Customers now enjoy double benefit – lower premium + tax saving._

❓*14. Will GST reforms reduce claim settlement hassles?*
✅ _Indirectly, yes. Since IRDAI and Finance Ministry are also tightening the NHCX (claims exchange), customers can expect smoother, more transparent claims._

❓*15. Can NRIs taking Indian insurance policies benefit from this GST cut?*
✅ _Yes. NRIs who buy health or life policies in India will also pay premiums without GST._

❓ *16. Will premiums ever increase again despite GST cut?*
✅ _The base premium may rise in future due to medical inflation or mortality risk, but the 18% GST burden is permanently gone._

❓ *17. Does GST removal apply to riders (like critical illness, accidental cover)?*
✅ _Yes. Since riders are linked to individual life/health policies, they also fall under 0% GST from 22 Sept 2025._

❓ *18. What about group health insurance from employers?*
✅ Group corporate insurance is not included yet. The exemption applies mainly to retail/individual policies.

❓ *19. Will existing ECS/auto-debit instructions automatically adjust premiums?*
✅ Yes. After Sept 22, insurers will auto-update billing and deduct only the revised premium (without GST).

❓*20. How will customers know if insurers passed on GST benefits?*
✅ IRDAI has instructed insurers to clearly show GST = 0% on the premium receipt/invoice.

❓*21. Does GST exemption make insurance cheaper than mutual funds or deposits?*
✅ Yes. Because insurance now has 0% GST + tax benefits (80C/80D), it becomes one of the most cost-efficient financial products.

❓ *22. Will loss of Input Tax Credit (ITC) affect how much of the GST benefit insurers can pass on?*
✅ Yes. Insurers can no longer claim ITC on operational costs, which may result in partial—not full—18% savings being passed to customers.

❓ *23. What is the expected real benefit for policyholders after considering ITC loss?*
✅ Industry estimates suggest a net benefit of 3%–8%, depending on the insurer’s volume of retail business.

❓ *24. Will group health insurance offered by employers benefit from the GST cut?*
✅ No. The GST exemption applies only to individual policies; group policies continue to attract 18% GST.

❓ *25. Could employers shift from group cover to individual allowances due to the GST difference?*
✅ Yes. Experts anticipate a strategic shift, with employers considering allowances or reimbursements for individual policies, which are now tax-free.

❓ *26. Will this reform encourage insurers to promote individual health plans more aggressively?*
✅ Absolutely. With retail plans now cheaper and group plans still taxed, insurers may steer focus toward individual coverage.

❓ *27. How will this reform impact insurance penetration in India?*
✅ It’s expected to boost health insurance adoption, especially converting the "missing middle" who remain uninsured.

❓ *28. Does this apply to all types of health insurance—family floaters, senior citizen plans, top‑ups, etc.?*
✅ Yes. All individual health products, including floaters, senior citizen plans, riders, and top‑ups, fall under the exemption.

❓*28. Are there official notices or FAQs I should consult for implementation details?*
✅ Yes. CBIC and PIB will release official notifications and FAQs outlining rules for renewals, multi-year policies, and billing protocols.

❓ *29. How soon will we see official implementation notices?*
✅ The changes are effective from 22 September 2025, with official notifications expected to follow soon.

❓ *30. Could health insurance premiums ever rise again despite the 0% GST?*
✅ They might in the future due to factors like medical cost inflation, but the GST component is permanently eliminated.
#taxguide#gst

12 hours ago | [YT] | 0

Taxguide (sunayana)

What is the treatment of Input Tax Credit (ITC) on Stock held as on 22-Sep-2025?
GST Rate Changes Effect on Stock & ITC;

The implementation of new GST rates effective from has generated concerns regarding the treatment of ITC on existing stock.

Sharing you few FAQs on this issues

Q1. What will happen to the ITC for purchases made before changes in GST rates came into effect? Will I get ITC at a reduced rate now?

A1. - Section 16(1) of CGST Act: Registered persons can claim ITC on input tax charged on inward supplies, subject to conditions in the Act.

- ITC is permitted if the tax was paid at the rate applicable at the time of supply, provided all other conditions under the Central Goods and Services Tax (CGST) Act are satisfied.

Q2. The GST rate has been reduced on my outward supply of goods/services made on or after 22-Sept-2025, but I already have ITC of GST in the ledger that accrued on account of the higher rate. Can I continue to use such credit?

A2. ITC available in the electronic credit ledger may be utilised to discharge any output tax liability in accordance with section 49(4) of the CGST Act.

Q3. My outward supply is exempt under the new rate schedule. But I already have the ITC of GST paid in my ledger. Will I need to reverse ITC?

A3. ITC can be used for supplies until 21-Sep-2025.

For supplies made on or after 22-Sep-2025, when the revised rates become effective, ITC must be reversed in accordance with the provisions of the CGST Act.

- Sec 18(4): If choosing a composition scheme or goods/services become exempt, debit ITC for stock and capital goods based on pre-exemption stock.

Q4. Will I be allowed to take refund of accumulated credit arising out of inverted duty structure for supplies effected upto the date of effect of revised rate as notified?

A4. - Circular 135/05/2020-GST: Refund of accumulated ITC is allowed only if input tax rate is higher than output supply rate, not if rate changes on the same goods over time.

A refund of accumulated ITC is not permitted if the input and output consist of the same goods, even when these goods are taxed at different rates at different times.

Q5. If I already have stock on the date when the rate changes come into effect, should I apply the revised rate?

GST is levied at the rate applicable on the date of supply. The revised rates apply to outward supplies made from the date specified in the official notification.
#gstfaq#taxguide

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🗳️ Income Tax Poll: What's your status?
It’s ITR filing season!
Have you filed your Income Tax Return yet?

👉 Cast your vote:

1️⃣ Yes, already filed ✅
2️⃣ Not yet, thinking about it 🤔
3️⃣ Will file through CA/consultant 👍🏼
4️⃣ Still confused about the process 😕

Answer with emoji

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