New Delhi: Union Finance Minister Nirmala Sitharaman informed the Parliament that the cost of insurance to the policyholder is expected to decrease if the GST Council advocates for a reduction in GST rate on health and life insurance policies. Currently, the government charges 18 per cent GST on premiums paid for life and health insurance policies.
In a written reply in the Lok Sabha, Sitharaman informed that the GST Council had recommended to form a Group of Ministers (GoM) to holistically look into the issues in regards to GST on life insurance and health insurance. The GST Council had made the recommendation on September 9, 2024.
“…The matter of review of GST rates on life and health insurance is pending before the GoM. If a recommendation for a reduction in GST rate is made by the GST Council, the cost of insurance to the policyholder is expected to come down on account of reduction in GST,” she said.
While responding to the question as to how the government plans to ensure that insurance companies will pass on the benefits to customers if GST is reduced, the Finance Minister said competitive pricing would bring down the cost of insurance.
“As the GST rates are applicable over and above the insurance premium, if the GST rate is reduced, it is expected to benefit the policyholder directly especially in a competitive market with many insurers as the cost of insurance will reduce to that extent,” Sitharaman said.
Sitharaman-led GST council meeting will meet on December 21 where it is expected that the GoM report on reduction of GST on life and health insurance is expected to be deliberated upon.
Official data show that Rs 16,398 crore GST was collected from healthcare and life insurance policies by the Centre and state government in 2023-24.
GST Council meet on Dec 21
The GST Council will be meeting in Jaisalmer. Earlier, the first meeting of the GoM on life and health insurance was held on October 19, 2024. It was led by Bihar Deputy Chief Minister Samrat Chaudhary.
PTI quotes sources saying that the GoM has broadly agreed on exempting insurance premiums paid for term life insurance policies and senior citizens’ health insurance from GST.
Finance Minister Nirmala Sitharaman announced that reducing the GST rate on health and life insurance is under review. The GST Council’s Group of Ministers (GoM) is expected to present its report on December 21st, potentially leading to lower premiums for policyholders. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
