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GST exemption for individual insurance policyholders and zero rating of Intermediary services for service exporters
The rate rationalization and trade facilitation measures recommended in the 56th GST Council meeting represent a transformative leap towards the blueprint of a ‘simple’ Goods & Services Tax (GST). The impact of these measures, with the overall objective of ease of doing business and benefit to consumers, is directly reflected in the exemption granted to all individual health and life insurance services, making healthcare more affordable for consumers and expanding the insurance base in the country.
Another significant measure proposed is the alignment of the place of supply for intermediary services with the recipient location, allowing Indian exporters to claim the zero-rating benefit on services that were earlier taxable at 18%. This change will help reduce future litigation, allow refunds and bring the cost of services in line with other geographies, making India a preferred global service delivery hub.
The impact of the above changes on products and business processes, along with transition cases, needs to be monitored closely before the effective date.