The 55th GST Council meeting has postponed its decision on lowering the Goods and Services Tax (GST) rates for health and life insurance premiums, directing the Group of Ministers (GoM) to provide additional clarifications and a more comprehensive report. The matter will be taken up again in the next Council meeting.
Current Rates on Insurance by GST Council
- Health insurance, term life insurance, and ULIPs: 18% GST
- Endowment plans:
- 4.5% in the first year
- 2.25% from the second year onward
- Single premium annuity policies: 1.8% GST
These rates apply uniformly across all age groups.
GoM Recommendations
On December 16, the GoM on health and life insurance presented its recommendations, including:
- GST Exemption for Pure Term Life Insurance:
- Proposal to exempt GST on pure term life insurance policies covering family members.
- Expected to lower costs and make insurance more accessible.
- Health Insurance for Senior Citizens:
- Recommendation to waive GST on health insurance premiums for senior citizens, easing their financial burden.
Also Read : 2025 Insurance Trends Revealed: 30% Increase in Health Claims, Heart Disease at the Forefront
Expert Opinions
Gyanendra Tripathi, Partner & Leader (West), Indirect Tax, BDO India, noted the urgency of the decision. He said:
“If the GST rate revision on insurance premiums had been concluded in this meeting, it would have been very timely for the masses because a large number of insurance policies would have premiums due in the last quarter of the financial year. One would hope that the rate revision is finalised and implemented at the earliest to help increase the insurance coverage in the country.”
Next Steps
The GoM is set to meet in January 2025 to address additional suggestions and finalize its views on GST exemptions for insurance policies. Their updated recommendations will play a key role in shaping future GST rates for health and life insurance.
The Council’s decision on this matter is highly anticipated, as it could reduce financial burdens and boost insurance penetration across the country.
