Quick Summary
The GST Group of Ministers (GoM) has recommended exempting health and life insurance premiums from the 18% GST to make insurance products more affordable and boost penetration in India's underinsured market. While the proposal has been welcomed by the industry as a customer-friendly reform, experts
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FAQ :
The GST Group of Ministers has proposed exempting health and life insurance premiums from the 18% GST.
The proposal aims to make insurance products more affordable and increase insurance penetration in India, particularly for middle-class households, senior citizens, and vulnerable groups.
Experts are concerned that without the ability for insurers to retain input tax credits (ITC), they may face higher costs due to credit reversal, which could be passed on to policyholders.
The final decision will be made by the GST Council after further consultations with states.
Policyholders, especially those in middle-class households and vulnerable groups, could see reduced premiums and easier access to essential financial protection.
Challenges include the inverted duty structure and unutilised input credits, which could put pressure on insurer margins if the benefits of the GST cut are not passed on to policyholders.
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