The Goods and Services Tax (GST) Council is likely to discuss the issue of exemption of health and life insurance from the 18 percent levy when it will meet on September 9, two people familiar with the development said.

The proposal is under examination by the Council's Fitment Committee, which assesses rate rationalisation suggestions from various industries and stakeholders. "The fitment committee is analysing the revenue implications of exempting health and life insurance from GST. The recommendations will be presented to the Council ahead of the September 9 meeting," a government official told Moneycontrol on condition of anonymity.

"The GoM on rate rationalisation did not discuss the issue as the matter is being examined by the fitment committee. The committee will evaluate the potential revenue loss and other economic impacts before making a recommendation," a second person said.

All types of health and life insurance policies attract an 18 percent GST, a rate that has been criticised for burdening policyholders and potentially hindering the growth of the insurance sector. The deliberations by the fitment committee and the GST Council come amid growing calls for tax relief in this segment.

The upcoming GST Council meeting is expected to address these concerns comprehensively. However, the decision will also have to consider the potential revenue loss to the exchequer. The fitment committee's analysis and recommendations will play a crucial role in shaping the Council's final decision, he said.

The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state finance ministers, serves as the apex decision-making body for GST-related matters in India. In the Council of India, the central government has one-third of the total votes, while all the state governments combined have two-thirds.

Adding weight to the demand for exemption, Union Minister for Road, Transport and Highways Nitin Gadkari formally appealed to the finance minister for the withdrawal of GST on life and medical insurance premiums. In a letter dated July 28, Gadkari emphasised that taxing these essential services restricts their accessibility and growth.

"Levying GST on life insurance premiums amounts to taxing the uncertainties of life," Gadkari had written. "A person who seeks to provide some protection to their family against life's risks should not be burdened with additional taxes on the premium paid for this cover."

Backing the exemption, West Bengal Chief Minister Mamata Banerjee in a post on X on August 1 demanded rollback of the GST on the life, health insurance. “This GST is bad because it adversely affects the people’s ability to take care of their basic vital needs. If the Government of India does not roll back the anti-people GST, we will be bound to hit the road,” she wrote.