The Goods and Services Tax (GST) revenue from healthcare and life insurance services surged to ₹16,398 crore in FY24, according to Minister of State for Finance, Pankaj Chaudhary, in a statement to the Lok Sabha. This included ₹8,135 crore from life insurance services and ₹8,263 crore from healthcare insurance. An additional ₹2,045 crore was generated from reinsurance services, comprising ₹561 crore from life insurance reinsurance and ₹1,484 crore from healthcare reinsurance.
Comparing FY23 and FY24 Revenue
In FY23, GST collections from these sectors totalled ₹16,770 crore, slightly higher than FY24. The breakdown included ₹9,132 crore from life insurance and ₹7,638 crore from healthcare insurance. The decline in life insurance collections was offset by a rise in healthcare insurance revenue.
Exemptions and Tax Rates
Minister Chaudhary reiterated that GST on health insurance services is levied at a standard rate of 18%. However, specific schemes targeting economically weaker sections and differently-abled individuals—such as the Rashtriya Swasthya Bima Yojana (RSBY), Universal Health Insurance Scheme, and Jan Arogya Bima Policy—remain exempt from GST.
"In the pre-GST era, health and life insurance services were taxed similarly, with exemptions provided for certain welfare-focused schemes," Chaudhary noted.
GST Council and GoM Updates
The GST Council, in its 54th meeting on September 9, 2024, deliberated on requests to exempt or reduce GST on health and life insurance services. Subsequently, a Group of Ministers (GoM) was constituted, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, to evaluate these issues holistically. The GoM held its first meeting on October 19, 2024, discussing GST rates on insurance policies.
The GST Council is set to convene on December 21, 2024, in Jaisalmer, where it is expected to review the GoM’s recommendations.
Future Implications
The upcoming Council meeting may bring clarity on potential GST rate reductions or exemptions for insurance services, addressing demands from stakeholders for more affordable healthcare and life insurance solutions.
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