FM Sitharaman Signals Possible GST Reduction on Life and Health Insurance Premiums

Last updated: 04 December 2024

Quick Summary
The Indian Finance Minister, Nirmala Sitharaman, has indicated that a reduction in the Goods and Services Tax (GST) on life and health insurance premiums is being actively considered. A Group of Ministers has been formed to review the current GST framework for these policies, with potential changes to be discussed at the upcoming GST Council meeting on December 21. If implemented, a GST cut would directly lower insurance costs for consumers, as insurers are expected to pass on the savings in a competitive market. Currently, these premiums are taxed at 18%.

Finance Minister Nirmala Sitharaman has suggested that a reduction in the GST on life and health insurance premiums could lead to lower costs for policyholders. In response to a question in the Lok Sabha, she revealed that the GST Council had recommended the formation of a Group of Ministers (GoM) d
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FAQ :

Finance Minister Nirmala Sitharaman has suggested that a reduction in the GST on life and health insurance premiums could lead to lower costs for policyholders.

Potential changes to the GST on insurance are set to be discussed at the upcoming GST Council meeting on December 21.

Currently, life and health insurance premiums are taxed at an 18% GST rate.

The Group of Ministers has reportedly recommended changes including GST exemptions for term life insurance policies and health insurance plans for senior citizens. They are also considering exempting health insurance premiums for individuals with coverage below Rs 5 lakh.

A GST reduction would directly benefit consumers by lowering insurance costs, as competitive market conditions would likely lead insurers to pass on the savings.

In the 2023-24 fiscal year, GST collections from life and health insurance premiums amounted to Rs 16,398 crore.



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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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