The Ministry of Finance has clarified that manufacturers and marketing companies dealing in drugs, formulations, and medical devices must revise the Maximum Retail Price (MRP) and issue updated price lists to dealers and retailers to reflect the reduced rates under GST 2.0.
However, stocks already released in the market before the implementation date of September 22 are not required to be recalled or relabeled, the Ministry said in a fresh set of FAQs on GST issued Tuesday.
In the insurance sector, the Ministry announced that individual health and life insurance policies, including those covering family members, will be exempt from GST, effective September 22. Group insurance policies, however, will continue to attract GST. Additionally, reinsurance services — which serve as insurance for insurers by transferring risk to other companies — will also be exempt from GST.
The Ministry further stated that insurance companies will no longer be able to claim input tax credit (ITC) on GST paid for inputs such as commissions and brokerages on individual health and life insurance policies. While insurers currently claim ITC on many expenses, including commissions and reinsurance, the exemption on reinsurance services means ITC on these will be withdrawn. The ITC on other input services, like commissions and brokerages, will also be reversed since the output services are now exempt.
The 56th GST Council meeting, held on September 3, had approved the exemption of GST on premiums paid for individual health and life insurance policies, reducing the rate from 18 percent to zero from September 22.
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On other services, the Ministry clarified that beauty and physical well-being services will attract a fixed GST rate of 5 percent without ITC. Service providers will not have the option to charge 18 percent with ITC on these services.
