The Department of Finance’s Joint Secretary has hinted at a potential reduction in Goods and Services Tax (GST) on life and health insurance premiums, making them more affordable for customers, as per a report. Currently, an 18% GST is levied on premiums for term life insurance and health policies, including family floater plans. However, the government is considering exempting GST on specific insurance products.
The government recently received requests on the exemption of GST on term life and health insurances premiums. This might help the senior citizens especially where the main focus of the proposed exemption is the removal of GST on health insurance policies which is up to ₹ 5 lakh. This decision on this issue may be expected to be arrived at by the GST Council.
The Group of Ministers (GoM), tasked with reviewing GST rates on insurance premiums, met last Saturday and signaled support for reducing rates on premiums. Bihar Deputy Chief Minister Samrat Chaudhary, the GoM convenor, emphasized the panel’s commitment to providing relief, especially for senior citizens. He confirmed that the GoM would submit its report to the Council by the end of October.
Premiums for purchase of such packages that are over ₹5 lakh will still attract an 18% GST but exemption on extension to Senior Citizens – irrespective of the specified limit – could result in substantial relief. The final verdict on the GST Council may be followed by other modifications that would have the ultimate goal of reducing the financial pressure on policyholders.
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