The group of ministers (GoM) on health and life insurance has recommended exempting premiums for individuals from Goods and Services Tax (GST), Bihar Deputy Chief Minister Samrat Choudhary, convener of the panel, said on Wednesday.
Currently, health and life insurance premiums attract an 18 percent levy. “The Centre’s proposal is to exempt health and life insurance premiums for families and individuals. All members agreed with the proposal, though some states expressed concerns,” Choudhary said after the GoM meeting. The panel will submit its report to the GST Council for approval.
The council is expected to meet in the third week of September, according to Union Finance Ministry officials.
Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said states were broadly in favour of exempting premiums, though “a mechanism must be worked out so the benefit of lower rates goes directly to policyholders.” He estimated a revenue loss of about ₹9.7 billion annually from the measure.
Tax experts, however, cautioned that consumers may not see the full benefit. “Since insurers cannot claim back GST on expenses such as commissions, rent, and software, the final price reduction will be lower. A zero-rating of insurance would have ensured full pass-through to customers,” said Saurabh Agarwal of EY.
Addressing the GoM meetings on compensation cess, insurance, and rate rationalisation, Union Finance Minister Nirmala Sitharaman said the Centre’s proposals were part of “the next generation of GST reforms” aimed at strengthening India’s journey towards an Aatmanirbhar Bharat.
