Key Points
A parliamentary committee headed by former minister of state for finance Jayant Sinha has recommended that there is a need to rationalise the Goods & Services Tax (GST) on insurance products, especially health and term insurance..
It also suggested that the Reserve Bank of India, on behalf of the government, may issue on-tap bonds to meet the capital requirements of the insurance industry, which are pegged at Rs 4050,000 crore...
The committee, in its recommendations, observed that the high rate of GST results in a high premium burden, which acts as a deterrent to getting insurance policies..
"The committee, with a view to making insurance more affordable, recommends that GST rates applicable to health insurance products, particularly retail policies for senior citizens and microinsurance policies (up to limits prescribed under PMJAY, presently Rs 5 lakh), and term policies may be reduced," it noted...
"...recommend that the RBI, on behalf of the Government of India, may issue 'on-tap bonds of various maturities up to 50 years as against. the current maximum tenure of 40 years for investment by insurance companies," it noted, adding that the government may also explore avenues to earmark a portion of long-dated securities for insurance sector subscriptions as part of their annual borrowing programme...
