GST Reduction Expected to Make Insurance More Affordable, Says Finance Dept

The GoM recently decided to exempt GST on health insurance premiums for coverage up to INR 5 Lakh for individuals other than senior citizens.

The Department of Finance has indicated that a reduction in Goods and Services Tax (GST) will make insurance more affordable for customers.

According to the Joint Secretary of the department, the government has received several requests to exempt GST on term life and health insurance premiums.

An official stated that GST on term life insurance premiums and premiums paid by senior citizens for health coverage may be exempted from tax.

A Group of Ministers (GoM) met recently to discuss the GST rates on life and health insurance, and they decided to exempt GST on health insurance premiums for coverage up to INR 5 Lakh for individuals other than senior citizens.

The final decision regarding these changes will be made by the GST Council.

Health insurance premiums exceeding INR 5 Lakh will continue to be subject to an 18% GST. Currently, term life insurance premiums and family floater policies are also taxed at this rate.

“GoM members are broadly in agreement on reducing rates for insurance premiums. A final decision will be taken by the GST Council,” an official mentioned.

Bihar Deputy Chief Minister Samrat Chaudhary, said, “Every GoM member wants to provide relief to the public, with special emphasis on senior citizens. We will submit a report to the council, which will make the final decision.”

However, it has been suggested that there may be no GST on insurance premiums paid by senior citizens, regardless of the coverage amount.

In its previous meeting, the GST Council established a 13-member GoM to evaluate the taxation of health and life insurance premiums.

Chaudhary serves as the convenor of this group, which includes ministers from various states, including Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana.

The GoM has been tasked with submitting its report to the GST Council by the end of October.

Stay tuned for more such updates on Digital Health News.