No GST on life, health insurance: Insurers brace for cost shock

The GST exemption on individual protection and health policies will directly benefit consumers

- Anshika Kayastha

Insurers are bracing for higher operational costs after the government scrapped the goods and services tax (GST) on all individual life and health insurance premiums as part of its tax rationalization move.

Lower taxes on insurance policies have been a long-standing demand of the insurance sector, with the industry favouring a cut from 18% to 5% rather than a complete exemption.

The GST exemption on individual protection and health policies will, however, directly benefit consumers by reducing costs for insurance products.

Industry experts believe that in a country where insurance is under-penetrated and medical costs are rising rapidly and significantly, this will both nudge new customers to come under the insurance fold and encourage existing policyholders to enhance their coverage within the same budget.