Various reports suggest that the GST Council is expected to meet in November post the state elections to consider GoM’s suggestions on insurance GST. Currently GST on insurance products is at 18% and the suggest from GoM is to exempt health and term life insurance from the tax implication.
The loss ratios for insurers in their health portfolio has been on a rise and insurers have been taking regular price increases to contain the rising loss ratios. In the context of the rising loss ratios, it is important to ask whether insurers will be able to pass on the full benefit of GST exemption to policyholders and in a situation of them not doing so, would engage and nudge insurers to pass on the benefit effectively.
When Debasish Panda was asked the question he said, “typically the Government will ensure that the benefits of GST exemption on insurance are passed on to the policyholders.”
According to Panda, benefits of GST exemption on health and term life insurance could be entirely passed on to policyholders of the GST exemption stands Input Tax Credit (ITC) and he is hopeful that the Government will take a final call keeping in mind the interest of policyholders and economy.
Panda added that a GST exemption on health and term life insurance will provide impetus to the demand of these policies.
(Edited by : Poonam Behura)
