The upcoming GST Council meeting may bring much-needed relief to lakhs of policyholders across India. Reports suggest that the Council is seriously considering a major reduction — or even a complete exemption — of GST on life and health insurance premiums.
🔍 What’s Changing?
Currently, health and term life insurance premiums attract 18% GST, making essential coverage costlier for many. But now, proposals are on the table to:
- Abolish GST completely for term life insurance and senior citizen health insurance policies
- Exempt GST on health insurance policies with coverage up to ₹5 lakh
These recommendations come from the Group of Ministers (GoM) formed to rationalise GST rates in the insurance sector. The Insurance Regulatory and Development Authority of India (IRDAI) has already endorsed these suggestions, and the Council is likely to act soon.
💬 What Experts Are Saying
Industry leaders believe this could be a game-changer.
Hanut Mehta, CEO of BimaPay Finsure, said:
“The proposed reduction in GST on health insurance premiums from 18% to 5% is a timely and progressive step… a structural enabler in expanding access to health insurance.”
Such a move would boost insurance penetration, currently under 40% in India, and help reduce the burden of out-of-pocket medical expenses, which are among the highest in Asia.
💸 Will It Affect Government Revenue?
Yes — estimates suggest a revenue loss of ₹2,600 crore annually, with ₹2,400 crore linked to health insurance and ₹200 crore to term life insurance.
But the bigger goal for the government is financial inclusion and universal health coverage by 2047 — a mission that this tax relief directly supports.
✅ What It Means for You
- If approved, your insurance premiums may drop significantly.
- More affordable policies will encourage wider adoption, especially among the middle class and senior citizens.
- This could make financial protection accessible to millions who currently skip insurance due to high costs.
📌 Final Word
A GST cut on insurance isn’t just a tax reform — it’s a step toward a healthier, financially secure India. Stay tuned to Compliance Katta for the latest updates from the GST Council.