Life insurance companies have dismissed concerns over the potential impact of Goods and Services Tax (GST) exemptions on their operations, stating that any resulting loss of input tax credit (ITC) would have limited consequences. According to industry sources, discussions around exempting life insurance products from GST have resurfaced, but insurers believe the financial disruption will be marginal.
Currently, life insurance premiums attract GST ranging from 1.8% to 18%, depending on the policy type. If exemptions are granted, insurers would no longer be able to claim ITC on services and goods procured, which could increase operational costs. However, companies argue that input tax claims in the life segment are already low due to the nature of their products.
Experts say that while there may be some pricing adjustments if exemptions are implemented, they are unlikely to significantly impact policyholder costs or insurer profitability in the long term.
