New Delhi: The Centre has proposed exempting life and health insurance premiums from Goods and Services Tax (GST).
At present, insurance premiums attract 18 per cent GST, which has long been a concern for policyholders and insurers.
The 13-member Group of Ministers (GoM) on health and life insurance, set up in September, has been tasked with reviewing tax rates and will submit its report to the GST Council by the end of October. The panel comprises finance ministers from states including Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana.
The report would reflect the views and concerns of state finance ministers. The proposal is part of the Centre’s broader next-generation GST reform plan, which aims to simplify the tax regime by introducing just two rates—5 per cent and 18 per cent—based on whether goods or services are classified as merit or standard.
The potential exemption holds significant financial implications. In 2023-24 alone, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premiums and Rs 1,484.36 crore from GST on health reinsurance premiums. The Council’s final decision will have a significant impact on the insurance sector and lakhs of policyholders across the country.
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