New Delhi: The Centre has proposed exempting life and health insurance policies for individuals from the ambit of GST, the head of a panel of ministers set up by the GST council said on Wednesday, a move that is expected to provide relief to large sections of consumers.
Bihar deputy chief minister and convenor of the panel of ministers on health and insurance Samrat Choudhary said the Centre’s proposal is clear that individual insurance policies should be exempt from GST.
“This has been discussed and the GoM report will be presented to the council,” Choudhary was quoted as saying. He also said all members have given their approval for lowering rates and some states have given their own views. He said a final call issue would be taken by the GST council when it meets.
Telangana deputy CM Mallu Bhatti Vikramarka, a member of the GoM , said it was made clear that the benefit of GST should go to policyholders and not companies and a mechanism needs to be worked on to ensure this.
He also pointed to the fact nearly Rs 9,700 crore annual revenue loss is estimated due to the GST exemption to individual insurance policies. The 13-member panel on health and insurance was set up in Sept to draw up a roadmap on the issue and it is expected to submit its report by October.
The panel includes ministers from UP, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana.
“The proposed reduction of GST on health and life insurance from 18% to nil (exempt) shows how GST has evolved from just a way to collect revenue to a tool for advancing national goals.
It can help promote financial inclusion, strengthen healthcare, and support key initiatives like Ayushman Bharat and universal coverage,” said Saurabh Agarwal, Tax Partner, EY India.
“This change could be very important for both customers and the insurance industry. For individuals, especially senior citizens and low-income families, it could make insurance more affordable.”
