Significant Revenue Collection
The government informed Parliament that GST on health and life insurance brought in Rs 21,256 crore over the last three financial years, with Rs 8,263 crore collected in 2023-24. An additional Rs 3,274 crore was received from the reissuance of health policies during this period.
Fixed GST Rate
The GST Council had set an 18% rate since July 2017. According to this structure, the Centre and states each collect 9%. From the Centre’s share, 41% is distributed to the states based on the devolution formula.
Industry Demands
There is a growing demand from the industry to either exempt or reduce GST on life and health insurance. Representations have been received requesting changes, and the GST Council, comprising representatives from the Centre and states, prescribes GST rates and exemptions.
Exemptions for Certain Schemes
Certain insurance schemes targeting the poor and differently abled, like Rashtriya Swasthya Bima Yojana, Universal Health Insurance Scheme, Jan Arogya Bima Policy, and Niramaya Health Insurance Scheme, are exempt from GST.
Political Push for GST Reduction
Following suggestions from politicians like Nitin Gadkari and TMC MP Derek O’Brien, there is increasing political pressure to reduce or remove GST on health and life insurance. O’Brien highlighted the burden on the middle class and called for a reduction during Parliament’s zero hour.
