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Key Points

The Group of Ministers has recommended removing GST entirely from health and life insurance policies for individuals. This proposal comes as part of the government's broader next-generation GST reforms aimed at simplifying the tax system. Currently, policyholders pay 18% GST on their insurance premiums, which adds significant cost to essential financial protection. The GST Council is expected to make a final decision on this exemption during their meeting next month.

Key Points: GoM Proposes GST Exemption on Health and Life Insurance

  • GoM proposes complete GST exemption for individual health insurance premiums
  • Life insurance premiums for individuals also recommended for GST removal
  • Current 18% GST rate burdens policyholders with additional costs
  • Reforms aim to enhance affordability and boost insurance penetration
3 min read

GoM proposes exempting GST on health, life insurance for individuals

GST Council's Group of Ministers proposes full GST exemption on individual health and life insurance premiums, currently taxed at 18%, as part of next-gen reforms.

"Everyone expressed that Life and Health Insurance (for individuals) should be exempted from GST. The GST Council will decide - Bihar Deputy CM Samrat Choudhary"

New Delhi, August 20

Finance Minister Nirmala Sitharaman on Wednesday addressed the Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health and Life Insurance (for individuals), and Rate Rationalisation at Vigyan Bhawan.

"Everyone expressed that Life and Health Insurance (for individuals) should be exempted from GST. The GST Council will decide," said Bihar Deputy CM Samrat Choudhary, who was present at the meeting.

Telangana Deputy CM Mallu Bhatti Vikramarka also confirmed that the GoM proposed a complete exemption on health and life insurance for individuals.

Currently, both health and life insurance policy premiums attract 18 per cent GST.

During the meeting, the Union Finance Minister emphasised that the proposal by the Central Government is with a vision to usher in the next generation of GST reforms in India's journey towards becoming Atmanirbhar Bharat.

Union Minister of State for Finance, Chief Minister of Goa, Deputy CM of Bihar and Finance Ministers of States in the three GoMs were also present at the meeting.

The next GST Council meeting is likely to be held next month - September.

These reforms, proposed by the Central Government to the GoMs, are based on three key pillars:

Structural reforms: The reforms will correct inverted duty structures to cut input tax credit accumulation and boost domestic value addition, resolve classification issues for simpler compliance and fewer disputes and ensure stability & predictability in GST policy to strengthen industry confidence and long-term planning.

Rate rationalisation: The rate rationalisation exercise aims at providing greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime. This would enhance affordability, boost consumption and make essential and aspirational goods more accessible to a wider population.

Ease of living: The upcoming GST reforms will ensure seamless, tech-driven and time-bound registration, introduce pre-filled returns to reduce errors and mismatches and enable faster, automated refunds, all aimed at simplifying compliance, supporting businesses and enhancing the overall ease of living and doing business.

"The Central Government remains committed to building a broad-based consensus with the States in the coming weeks to implement the next generation of GST reforms in the spirit of cooperative federalism," Ministry of Finance posted on X.

In the Independence Day speech from the ramparts of the Red Fort, Prime Minister Narendra Modi announced upcoming next-gen GST reforms before Diwali so as to benefit consumers, small industries and MSMEs.

- ANI

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Reader Comments

P
Priya S
Excellent move! Health insurance should never have been taxed in the first place. This will encourage more people to get insured, especially in tier 2 and 3 cities where penetration is low.
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Michael C
While this is a positive step, I hope the government ensures that insurance companies actually pass on the full benefit to consumers and don't find other ways to increase premiums.
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Ananya R
As someone who pays ₹25,000 annually for family health insurance, this will save me ₹4,500! That's significant savings for middle-class families. Hope GST Council approves this quickly.
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Suresh O
Good initiative but implementation before Diwali seems ambitious. GST Council should take proper time to discuss revenue implications and ensure states are on board. Rushing reforms isn't wise.
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Nisha Z
This is exactly what we need! Medical costs are skyrocketing and making health insurance affordable will help so many families. Hope life insurance gets the same treatment 🤞

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