GST Council May Make Health Insurance Premiums Tax-Free at 55th Meeting in December

In a significant move to make health insurance more affordable, the 55th GST Council Meeting in December could approve a GST exemption on health insurance premiums, according to sources from Business Today TV. The Group of Ministers (GoM) on Life & Health Insurance recently recommended that GST be waived on pure term life insurance covering families and individuals, as well as all health insurance policies for senior citizens.

Key Highlights:

Current Tax Structure: Health insurance premiums currently attract 18% GST, generating around Rs 6,354 crore annually. In FY 2022-23, individual health insurance premiums alone amounted to Rs 35,300 crore.

Proposals Under Review:

Full Exemption for Individual Health Insurance Premiums: Projected revenue loss of Rs 3,495 crore.

Exemption for Senior Citizens & Policies up to Rs 5 Lakhs: Estimated revenue loss of Rs 2,110 crore.

Exemption for Senior Citizens Only: Anticipated revenue impact of Rs 645 crore.

Reduction of GST Rate to 5%: Would lead to a revenue reduction of Rs 1,730 crore.

The fitment committee and GoM will assess the financial and social impacts, finalizing the proposal for the Council to review. Additionally, the GoM’s Rate Rationalisation report will be discussed alongside the fitment committee’s recommendations.

The meeting, scheduled for December in Rajasthan, marks a departure from Delhi, where Council meetings have traditionally been held.

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