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Key Points

The government has directed insurance companies to immediately pass on GST benefits to all policyholders. This follows the GST Council's decision to exempt individual life and health insurance policies from taxation. The move is expected to significantly reduce premiums and make insurance more affordable for common people. Insurance companies must now conduct outreach campaigns to ensure customers are aware of these savings.

Key Points: Centre Directs Insurers Pass GST Benefits to Policyholders

  • Government directs insurers to pass GST exemption benefits to policyholders
  • Health and life insurance premiums now at nil GST rate instead of 18%
  • Measure aims to make insurance more affordable and accessible nationwide
  • Insurance companies must conduct outreach campaigns to publicise GST reforms
2 min read

Centre directs insurance companies to pass on GST benefits to policyholders

Government orders insurance companies to conduct outreach campaigns and fully pass on GST exemption benefits for life and health insurance policies to customers.

"The GST rationalisation on life and health insurance premiums will significantly improve affordability - Finance Ministry"

New Delhi, Sep 16

The government has directed insurance companies to proactively undertake outreach campaigns to publicise GST reforms and pass on the benefits to policyholders.

M. Nagaraju, Secretary, Department of Financial Services (DFS), chaired a meeting with senior officials of DFS, IRDAI, CMDs of public sector insurance companies and CEOs of leading private sector life and non-life insurance companies and officials from Life Insurance Council and General Insurance Council here.

The secretary highlighted prospective positive impact of the GST reforms in making insurance more affordable and accessible for the common man.

The measure is expected to make insurance more accessible and cost-effective, thereby strengthening financial security and enhancing insurance penetration across the country, according to a Finance Ministry statement.

The meeting was held in pursuance of the exemption of GST on all individual life and health insurance policies as approved by the GST council in its 56th meeting.

During the meeting, the Secretary emphasised the importance of ensuring that the benefits of the tax reduction are fully passed on to both existing and prospective policyholders.

The GST rationalisation on life and health insurance premiums will significantly improve affordability, strengthen penetration and provide a boost to consumption ahead of the festive season.

Health and life insurance, which earlier attracted 18 per cent GST, have now been moved to the nil tax category.

According to a report by rating agency ICRA, policyholders will benefit from lower premiums.

In general insurance, the retail health segment which accounted for 16 per cent of the industry’s gross direct premium income (GDPI) in FY25, will see premiums come down, though profitability of standalone health insurers may be under pressure if the full benefit is passed on.

The nil rate for health insurance premiums is poised to enhance affordability and accessibility for patients. As health insurance penetration further improves, it will, in turn, benefit the hospitals sector.

In the long run, this step aligns with the government’s vision of making healthcare more inclusive and affordable, according to the report.

—IANS

- IANS

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Reader Comments

P
Priya S
Good move by government but I hope insurance companies actually pass on the full benefit. Sometimes they find ways to keep some benefit with themselves through hidden charges.
A
Aman W
This is excellent timing before festive season. Many families were postponing insurance purchases due to costs. Now more people can secure their health and life coverage. 👍
S
Sarah B
As someone who recently bought health insurance, I'm wondering if existing policyholders will get refunds or just reduced renewal premiums? The article isn't clear about this.
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Vikram M
Great initiative! This will definitely improve insurance penetration in rural areas where affordability was a major concern. Healthcare should be accessible to all Indians.
M
Michael C
While the GST removal is welcome, I hope the government also focuses on improving claim settlement ratios and making the process more transparent. Lower premiums are good only if claims are honored properly.

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