Health insurance premiums may drop for policies with up to 5 lakh cover for non-senior citizens
The Group of Ministers (GoM) has proposed removing the goods and services tax (GST) on health insurance premiums for non-senior citizens with coverage up to Rs.5 lakh, according to sources. It has proposed a 5% GST against the current 18% for premiums on health covers above Rs.5 lakh, the sources added. The panel has also proposed that senior citizens should be exempted from current 18% GST that they pay on health insurance premiums.
The move, if adopted in the upcoming GST Council meet in Jaisalmer on December 21, could make healthcare affordable and lower the cost of insurance for policyholders, aligning with the government's broader agenda of enhancing inclusive healthcare.
The GoM’s recommendation comes amid growing demand for removing or lowering the current GST rate of 18% on life and health insurance policies.
The government garnered a substantial Rs.16,000 crore of revenue from GST on insurance policies in FY2023-24, as per a government response in the Lok Sabha. The potential revenue loss on the back of the relief on health insurance premium could come close to Rs.2,100 crore.
Meanwhile, in a written reply in the Lok Sabha, Finance Minister Nirmala Sitharaman said the GST Council, in its September 9 meeting, had recommended constituting a GoM to holistically look into the issues pertaining to GST on life insurance and health insurance.
