GST on Health Insurance to reduce, deadlock persists on input tax credit: Sources
The awareness for health insurance has increased after Covid. To increase penetration, the government is ready to reduce GST on Health Insurance premium. But ET Now has learnt that deadlock persist on input tax credit. During talks with Insurance companies, Government has in principle agreed to reduce GST on health insurance policies from 18% to 5% without input tax credit. But Insurance Industry insists on input tax credit. Insurance companies continuously demanding to reduce GST on health insurance premium. According to insurance companies, 18% GST is a big hurdle in health insurance sale. 18% GST on Health Insurance policies is hampering penetration. The industry says loss due to GST cut will be compensated with increased premium and high volume. Insurance Companies want GST on Health insurance to reduce from 18% to 12% with Input Tax credit. There is an 18% GST imposed on life and health insurance currently. A high GST rate is not supportive of increasing insurance penetration. The demand for reduction of GST on health insurance premium has been around for some time now due to the low penetration of health coverage in India.
