Ministers' panel for nil GST on life, health insurance

A panel of ministers appointed by the Goods and Services Tax (GST) Council is broadly in favour of exempting the 18% tax currently levied on health and life insurance premiums, ministers who attended its meeting on Wednesday said, in a development that potentially bolsters citizens' financial security in healthcare.

- Gireesh Chandra Prasad, Subhash Narayan & Anshika Kayastha

"The group of ministers discussed the proposal to make these insurance services free of GST. States expressed their views," convenor of the group of ministers (GoM) and Bihar's deputy chief minister Samrat Chaudhary told mediapersons after the meeting. "The group of ministers' report will be placed before the GST Council."

Further, Punjab finance minister Harpal Singh Cheema said members of the ministerial group felt the benefit of tax reduction should be passed on to the consumers by businesses.

Two government officials said on the condition of anonymity that the relief will be available for individuals and, perhaps, for family health plans as well. However, they did not offer clarity on whether the relief will be available for group policies purchased by companies.

As per official data for FY23, total health insurance premiums in India amounted to approximately ₹90,032 crore. Of this, individual health insurance premiums contributed 39% or ₹35,300 crore. GST amounting to ₹6,354 crore was collected on individual health insurance premiums at the current rate of 18%.

Experts said the move to exempt GST on health and life insurance premiums would provide significant relief to households.