- A Group of Ministers led by Bihar’s Deputy Chief Minister Samrat Chaudhary has recommended GST exemption on pure term life insurance policies
- The GoM also suggests reducing the GST rate on individual health insurance premiums from 18% to 5%
- These recommendations have been submitted to the GST Council for discussion in their next meeting on December 21
- The GoM recommends an exemption for health insurance for senior citizens but suggests no changes for other insurance products like ULIPs
- Finance Minister Nirmala Sitharaman noted that lower GST rates on insurance would likely benefit policyholders by reducing the cost of insurance
- Current GST rates are 18% for health, term, and ULIPs, with tiered rates for endowment policies and a lower rate for single premium annuity policies
- The Financial Services Department and the Insurance Regulatory and Development Authority of India support the proposal to rationalize GST on insurance
- Developed countries in the European Union and Canada do not apply VAT or GST on insurance products, which supports the case for similar exemptions in India
- The Irdai has proposed GST exemptions for micro-insurance policies, senior citizen health insurance, and term life insurance policies to aid vulnerable groups
- There is a noted inconsistency in GST application, with medical services being exempt but insurance premiums being taxed
Source: business-standard.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
