New Delhi, March 13 -- There is unanimity on the need to reduce the goods and services tax (GST) on health and life insurance premia from 18%, but consensus eludes on what the final rate should be: nil, 5% or 12%.

The central government is open to fully exempting health and life insurance premia from the GST, said two persons aware of the development. But the insurance industry, at a meeting with finance ministry officials last week, proposed a 12% as it would allow companies to fully claim credit against GST paid on inputs, the people said, speaking on the condition of anonymity.

Some state ministers, however, are batting for 5%, arguing that would cushion the impact on the exchequer. While a few suggested that insurers should be allow...