GST on Life & Health Insurance: GoM Recommendations Awaited

Currently, GST on health insurance and pure-term life insurance services is levied at a standard rate of 18%.

The Group of Ministers (GoM) formed to address issues related to GST on life and health insurance will submit its recommendations to the GST Council upon completion of its review, according to Minister of State for Finance, Pankaj Chaudhary.

Speaking in the Lok Sabha on Monday, Chaudhary highlighted that the issue of exempting or reducing GST on life and health insurance was discussed during the GST Council's 54th meeting on September 9, 2024.

Following detailed deliberations, the Council decided to constitute a GoM under the leadership of Samrat Chaudhary, Deputy Chief Minister of Bihar, to examine the matter comprehensively.

The GoM convened its first meeting on October 19, 2024, in New Delhi to discuss GST rates on life and health insurance policies. "Recommendations of the GoM, when received, will be placed before the GST Council," Chaudhary stated.

Currently, GST on health insurance and pure-term life insurance services is levied at a standard rate of 18%.

Changes in GST rates and exemptions on these services are subject to the recommendations of the GST Council, a constitutional body comprising representatives from the Union and State/UT governments.

Revenue from GST on Insurance Services

In response to another query, Chaudhary disclosed that revenue generated from GST on health insurance services stood at INR 8,263 Cr in FY 2023-24, up from INR 7,638 crore in the previous year.

In FY24, GST collections from healthcare and life insurance services totaled INR 16,398 Cr, with INR 8,135 Cr from life insurance and INR 8,263 Cr from health insurance. An additional INR 2,045 Cr was collected from reinsurance, comprising INR 561 Cr from life and INR 1,484 Cr from health insurance.

“In the pre-GST (service tax) period also, health and life insurance services were taxed at the standard rate and similar exemptions were given for specific health and term life insurance schemes catering to the needs of economically weaker sections of society,” the minister further said.

The GST Council is scheduled to convene on December 21 in Jaisalmer, with plans to address the issue of GST on life and health insurance.

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