Not exemption, insurance brokers want ‘zero-rate’ GST

After the insurance industry lost input tax credit benefits from the recent goods and services tax (GST) exemption, the sector's intermediaries are drumming up support for a 'zero-rate' tax structure that could ease insurers' costs, stem their own commission cuts as also any looming premium hikes.

- Anshika Kayastha

Yet, the industry is divided on the prospects as the proposal may struggle to take off, given the sweeping policy changes it would entail.

According to four people with knowledge of the matter, the Insurance Brokers' Association of India (IBAI) is preparing to approach the GST Council and the Central Board of Indirect Taxes and Customs (CBIC) after early discussions with the finance secretary and other officials received a favourable response.

In simple terms, a zero-rate means no GST is charged on the output, but credit can still be claimed for the tax paid on the

The brokers' push reflects mounting concern within the industry following the recent GST rationalization

inputs-removing the extra tax layer that is building up through the value chain. This treatment would allow insurers and intermediaries to claim input tax credit on expenses including broker commissions. Insurers now bear most of the burden, with part of it passed on to brokers through lower commissions.