E-Paper
No GST on health insurance soon: Who will benefit? All you need to know
The GST exemptions are imposed on all individual insurance policies, including term life, ULIP or endowment policies and reinsurance.
With the aim of making insurance more affordable and broadening coverage, individual life and health insurance policies have been exempted from GST, a change to take effect on September 22.
The exemptions apply to all individual insurance policies, including term life, ULIP or endowment policies and reinsurance. Since 2017, 18% GST has been levied on life insurance.
The shift is a part of the broader two-rate GST structure with 5% and 18% GST, with a reduction of GST on several items. This decision was taken by the GST council, headed by Union Finance Minister Nirmala Sitaraman.
Who stands to benefit
The exemption is set to benefit anyone looking to buy a health policy on or after September 22. An individual looking to buy a policy after this date will be exempt from paying GST.
While earlier an 18% GST was added to a policy with the base premium of ₹20,000, raising the total payable amount to ₹23,600, with the exemption, the amount would now stay at ₹20,000.
This exemption will encourage individuals to opt for life insurance or increase their coverage. It will also make health insurance more affordable for the common man.
In 2023-24, the Centre and states collected ₹8,262.94 crore through GST on health insurance premiums, while ₹1,484.36 crore was collected on account of GST on health reinsurance premiums, news agency PTI reported.
Earlier, a Group of Ministers called for the exemption of life and health insurance from GST, while Telangana minister Mallu Bhatti Vikramarka said that this would translate into a revenue loss of ₹9,700 crore. Vikramarka also said that the benefits of GST reduction should go to the policyholders and not the insurance companies, urging the GST council to devise a mechanism for the same.
