GST Council May Exempt Term Life Insurance from Tax, No Change for Investment-Linked Plans

The GST Council is expected to exempt term life insurance policies from the Goods and Services Tax (GST), potentially increasing the appeal of pure protection plans. However, life insurance policies with an investment component will continue to be taxed.

The decision is likely to be confirmed at the GST Council meeting on September 9. A senior government official highlighted that only the uncertainties of life should be exempted from GST, not investment-related policies. The exemption for term life insurance could result in an estimated revenue loss of ₹200 crore annually.

This move is anticipated to make term life insurance more affordable, potentially increasing adoption in India, where insurance penetration is still low compared to developed countries.

While term life insurance may become more accessible, investment-linked life insurance plans will remain relatively costly due to the continued 18% GST rate.

Key Points:

  • Term Life Insurance: Expected GST exemption
  • Investment-Linked Plans: No GST change, remain costly
  • Decision Date: September 9, 2024
  • Estimated Revenue Loss: ₹200 crore annually
  • Potential Impact: Increased adoption of term life insurance in India

#GSTUpdate #TermLifeInsurance #InvestmentPlans #FinancialSecurity #InsuranceIndia #TaxNews

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