Considering buying or renewing life or health insurance? The government may soon offer you a tax break. Reports suggest that the GST Council is set to review a proposal to rationalise rates on life and health insurance premiums in December.
According to sources, the GST Council is expected to meet after the Maharashtra and Jharkhand elections to examine a report by the Group of Ministers (GoM) and make a decision. The GoM, led by Bihar Deputy CM Samrat Chaudhary, held a detailed meeting on the issue in New Delhi on October 19, where a consensus is believed to have been reached.
The GoM is likely to propose a complete GST exemption on premiums for pure term life insurance and family coverage. If accepted, this could result in a potential revenue loss of around ₹213 crore annually.
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Additionally, the GoM is expected to recommend GST exemptions on health insurance policies for senior citizens, and for non-senior citizens, policies with coverage up to ₹5 lakh. If approved, the revenue impact from this change could be approximately ₹2,100 crore per year.
Currently, all insurance and reinsurance premiums are subject to an 18% GST. It remains to be seen if the government will proceed with this proposal to provide relief to the public.