No GST on term life, health insurance plans for senior citizens? What we know so far
The Goods and Services Tax (GST) Council is expected to consider a proposal to remove GST (goods and services tax) on premiums for term life and health insurance. The proposal, if approved, will offer a significant relief to policyholders and support the insurance sector by lowering costs.
The Group of Ministers (GoM) on GST recently reached a consensus on a proposal to exempt from GST premiums paid for term life insurance and also health insurance for senior citizens. The GoM also agreed on the proposal to exempt health insurance policies with coverage up to Rs 5 lakh from paying GST.
Currently, life and health insurance premiums are taxed at a rate of 18%. The GST Council will take the final call on these proposals.
Pankaj Nawani, CEO of CarePal Secure, remarked on the potential impact of reducing the 18% GST: “The idea of reducing the 18% Goods and Services Tax (GST) on term life and health insurance has sparked a lot of debate. Many believe that lowering GST, especially from the current 18%, could help tackle the affordability issue, making insurance more accessible for a broader group of people. But here’s the tricky part — GST helps fund important social welfare schemes, which makes it difficult to completely remove it for all types of insurance policies.”
