Responding to a question in the Lok Sabha, she revealed that the GST Council had recommended the formation of a Group of Ministers (GoM) in its September 9 meeting to comprehensively review GST on life and health insurance policies.
The matter is still under examination, and any proposed reduction in GST rates will be discussed in the upcoming GST Council meeting on December 21. Sitharaman stated that if a reduction in GST rates is approved, it would directly benefit policyholders by lowering the cost of insurance.
She further emphasised that in a competitive market with numerous insurers, such reductions would be passed on to consumers rather than being absorbed through increased premiums.
Currently, life and health insurance policies are subject to an 18% GST rate. However, the GoM has reportedly agreed to several changes, including GST exemptions for term life policies and senior citizens’ health insurance.
Health insurance premiums for individuals under Rs 5 lakh cover may also be exempt from GST, while policies with coverage above Rs 5 lakh would continue to attract the current GST rate.
In the 2023-24 fiscal year, the Centre and states collected Rs 16,398 crore in GST from life and health insurance premiums, which includes Rs 8,135 crore from life insurance and Rs 8,263 crore from health insurance.
(With PTI inputs)
