GST On Term Life Insurance Premium, Health Coverage For Senior Citizen Likely To Be Exempted

GST On Health Insurance Premium: The GST Council addressed this issue during its September meeting, following discussions about the 18 per cent GST on life and health insurance premiums.

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GST On Health Insurance Premium: The Group of Ministers (GoM) is expected to recommend exempting goods and services tax (GST) on term life insurance premiums and health insurance premiums paid by senior citizens. However, the Official's premiums paid for health insurance coverage of above Rs 5 lakh will continue to attract 18 per cent GST.

This long-awaited GST exemption or reduction for life and health insurance has been a key demand from the industry, as it would ease the tax burden on both insurers and policyholders.

While most GoM members, led by Bihar Deputy Chief Minister Samrat Chaudhary, advocated for a "full exemption" on premiums for life and health policies, some members suggested lowering the GST rate from the current 18 per cent to 5 per cent.

The ministerial panel, responsible for reviewing the rates, is set to present its recommendations to the GST Council by October 31. The final decision will be made during the next GST Council meeting. Currently, life and health insurance premiums are subject to an 18 per cent GST.

The GST Council addressed this issue during its September meeting, following discussions about the 18 per cent GST on life and health insurance premiums. The panel learnt to have discussed the revenue implication in various options suggested by the Fitment Panel — comprising revenue officials of the Centre and states. 

Other options discussed during the GoM meeting included exempting premiums paid by senior citizens and premiums with coverage up to Rs 5 lakh, or alternatively, only exempting premiums paid by senior citizens from the GST ambit. 

Last month, the GST Council, headed by Finance Minister Nirmala Sitharaman, set up a GoM on slashing the tax rate on life and health insurance, as well as reducing the GST on cancer drugs. 

The 54th GST Council meeting, held on September 9, reached a “broad consensus” to bring relief to individuals and senior citizens with a decision on the GST applied to health insurance premiums. (With IANS Inputs)