GST Relief on Insurance: GoM Seeks Safeguards to Ensure Benefits Reach Policyholders

Last updated: 29 August 2025


The Group of Ministers (GoM) on Life and Health Insurance, chaired by Bihar Deputy Chief Minister Samrat Choudhary, met on Wednesday to deliberate on the Union government's proposal to reduce GST on individual life and health insurance policies.

The GoM broadly agreed that easing the GST burden is crucial to making insurance more affordable for individuals. Most states extended support for exemptions on individual policies, noting that the Union's proposal aligns with recommendations made earlier in December 2024.

GST Relief on Insurance: GoM Seeks Safeguards to Ensure Benefits Reach Policyholders

However, states including Karnataka, West Bengal, Kerala, Punjab and Tamil Nadu raised concerns over whether policyholders would actually benefit from the exemption. They emphasized the need to ensure that insurers pass on the relief to customers rather than retaining undue gains. Punjab and Tamil Nadu reiterated their support for earlier proposals but stressed that accountability mechanisms must be put in place to ensure transparency.

The deliberations also highlighted that the proposal could carry a significant revenue impact, estimated at around ₹9,900 crore annually. Some members flagged the need for safeguards to prevent misuse and called for stronger monitoring to guarantee that benefits reach end-users.

Concluding the discussions, the Convenor recorded in-principle agreement to reduce the GST burden on insurance, while acknowledging state-specific concerns. The GoM recommended that the final decision be taken by the GST Council after considering all formal submissions from the states.


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