In response to a query in the Lok Sabha, the Ministry of Finance clarified that the Government has not yet taken a final decision on reducing the GST on Life Insurance Corporation (LIC) premiums. However, the issue is under active consideration by a Group of Ministers (GoM) constituted to evaluate GST on life and health insurance comprehensively.
The issue was first placed before the GST Council during its 54th meeting held on September 9, 2024, in New Delhi. Following in-depth deliberations, the Council agreed to form a GoM, chaired by Shri Samrat Choudhary, Deputy Chief Minister of Bihar, to examine the matter holistically.
At the 55th meeting of the GST Council held on December 21, 2024, in Jaisalmer, the GoM sought additional time to finalize its recommendations. The Council accepted the request, indicating that further decisions on the matter will be based on the upcoming report by the GoM.
Currently, LIC premiums attract 18% GST for most traditional policies, which has been a concern for policyholders and stakeholders who argue for a lower tax burden on essential financial protection products.
The outcome of the GoM's review could potentially pave the way for tax relief in the insurance sector, especially for individual life insurance policyholders.
Official copy of the notification has been attached
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