Government proposes GST exemption for life, health insurance policies
The 13-member panel was set up in September 2024 to draw a roadmap on the issue and will submit its report in October
In a long-awaited move that will benefit a large section of consumers, the Central government has proposed exempting life and health insurance policies for individuals from the ambit of the Goods and Services Tax (GST).
Samrat Choudhary, Deputy Chief Minister of Bihar and convener of the panel of ministers on health and insurance, stated, “This has been discussed, and the Group of Ministers (GoM) report will be presented to the council.”
He added that all members approved the lowering of rates, and some states presented their views. A final call on the matter would be taken by the GST Council.
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. A mechanism is required to ensure this happens. He pointed out that the Rs.9,700 crore annual revenue loss was estimated due to the GST exemption on individual insurance policies.
The 13-member panel on health and insurance was set up in September 2024 to draw a roadmap for the issue and will submit its report in October.
The panel includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana.
Welcoming the move, Saurabh Agarwal, Tax Partner, EY India, remarked, “The proposed reduction of GST on health and life insurance from 18 percent 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.”