GST Council Meeting: GoM Proposes Reducing GST Rate to 5% for Health Insurance Services
The 55th GST Council meeting will review the current GST structure on life and medical insurance. The Group of Ministers (GoM) on Health Insurance shared its recommendations on December 16, 2024. These proposals will be discussed during the upcoming GST Council meeting in Jaisalmer.
Key Recommendations from GoM
1. Exemption for Pure-Term Life Insurance
The GoM proposed a GST exemption for pure-term life insurance policies that cover family members. This move aims to reduce financial stress on policyholders by eliminating GST on these policies.
2. Exemption on Health Insurance for Senior Citizens
The group recommended a GST exemption for health insurance policies targeting senior citizens. This exemption would make healthcare more affordable for the elderly.
3. Reducing GST on Individual Health Insurance
The GoM suggested reducing the GST rate on all individual health insurance policies to 5%, without the option for Input Tax Credit (ITC). This change intends to lower health insurance premiums, making them more accessible and affordable.
4. Exemption for Policies with Premiums up to ₹5 Lakh
The Council is expected to consider exempting health and life insurance policies with premiums up to ₹5 lakh from GST. This proposal targets lower and middle-income groups to reduce their tax burden and encourage insurance investments.
Current GST Structure on Insurance
Currently, the GST rate on insurance premiums stands at 18%. If the GST Council approves these recommendations, it will significantly reduce the cost of premiums. As a result, insurance will become more accessible for senior citizens, lower-income groups, and individuals seeking affordable health coverage.
Upcoming Deliberations
Union Finance Minister Nirmala Sitharaman will chair the GST Council meeting on December 21, 2024. The Council will deliberate on these proposals, which have the potential to transform the GST landscape for life and health insurance. If adopted, these changes could lower premiums and expand insurance access to a wider segment of the population.
