The GST Council has established a group of ministers (GoM) to assess the Goods and Services Tax (GST) rate on health insurance policies, a move aimed at providing potential relief to policyholders. Currently, premiums for both health and life insurance are taxed at 18%, a significant burden on individuals and families seeking essential health coverage. The decision to form the GoM was made during the 54th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, held in New Delhi.
This development follows reports indicating that the council may lower the GST rate on health insurance premiums, particularly benefiting senior citizens. The GoM will examine the issue in detail, reviewing data and considering recommendations to potentially reduce the GST burden on policyholders.
GST Collection on Insurance Premiums
During the fiscal year 2023-24, the Centre and states collected ₹8,262.94 crore in GST from health insurance premiums and ₹1,484.36 crore from health reinsurance premiums. These figures highlight the significant revenue generated from insurance taxes, and the council will need to balance revenue considerations with the need for affordable health coverage.
54th GST Council Meeting
The 54th GST Council meeting, held at Sushma Swaraj Bhawan in New Delhi, included high-level representatives from across India, including Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya, and Deputy Chief Ministers from several states such as Arunachal Pradesh and Bihar. The council reviewed a report from the fitment committee regarding the taxation of life and health insurance premiums.
Potential Relief for Policyholders
There has been growing demand for reducing the GST rate on health insurance policies, especially as healthcare costs continue to rise. A reduction in GST could offer substantial relief to both individuals and senior citizens, encouraging more people to opt for health insurance coverage. The move aligns with broader government initiatives to enhance healthcare access and affordability in the country.
What’s Next?
The group of ministers will thoroughly review the current GST rate structure and present their recommendations in a future council meeting. If approved, the change could lead to a reduction in insurance costs and increase the uptake of health insurance policies across the country, ultimately benefitting millions of people.
