CAG Report Highlights ₹445 Crore GST Loss Due to BRS Government’s Oversight on Farmers’ Insurance Scheme.
The Comptroller and Auditor General (CAG) has criticized the former BRS government for a significant financial oversight that resulted in a loss of ₹445 crore in GST payments. This amount, according to the CAG, could have been saved if the agriculture department had applied for the available GST exemption on the LIC premium for the Farmers Group Life Insurance Scheme.
Launched in partnership with LIC by the BRS government in June 2018, the scheme saw the department disbursing ₹3,649.92 crore as a premium to LIC from July 2018 to September 2021, which included a GST component of ₹445 crore.
The CAG’s report highlighted that, according to a 2017 GST Council decision, services extended to the central or state governments under any insurance scheme funded by the government were exempt from GST. It was noted that the state not only neglected to apply for this exemption but also omitted to include a GST exemption clause in the Memorandum of Understanding (MoU) with LIC.
As a result, the department unnecessarily expended ₹445 crore on GST from the fiscal years 2018-19 to 2020-21. The issue was finally addressed with LIC by the agriculture department in 2021, and the GST exemption was secured for the year 2021-22 onwards.