Is GST Exemption on Health and Life Insurance Being Proposed by GoM?
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Synopsis
The Group of Ministers proposes a groundbreaking GST exemption on health and life insurance premiums, potentially transforming the insurance landscape in India. This move, confirmed by Bihar's Deputy Chief Minister, aims to increase insurance accessibility in a country with low coverage rates. Stay tuned for updates on this significant development.
Key Takeaways
- GoM proposes GST exemption on health and life insurance premiums.
- Move could enhance insurance accessibility in India.
- Proposal to be discussed by GST Council.
- Mixed reactions from states regarding potential revenue implications.
- New GST reforms expected before Diwali 2023.
New Delhi, Aug 20 (NationPress) In a significant step towards enhancing the affordability of insurance, the Group of Ministers (GoM) on insurance has suggested a total exemption of GST on health and life insurance premiums, as stated by Bihar Deputy Chief Minister Samrat Choudhary on Wednesday.
If this proposal gains approval, it could substantially boost insurance penetration in India's predominantly underinsured sector.
Deputy Chief Minister Samrat Choudhary, who is part of the GoM, confirmed that this recommendation will soon be presented to the GST Council for a conclusive decision.
He mentioned that the council will deliberate after engaging with all states.
The GoM's assembly on August 20 was led by Finance Minister Nirmala Sitharaman, who encouraged states to collectively evaluate the proposals and reach a fair conclusion.
While several states have shown support for the exemption initiative, others expressed apprehension regarding potential revenue losses.
Gajendra Singh, a member of the Rajasthan GST Council, noted that GST reforms have not significantly impacted state revenues thus far, but initiatives such as reduced duties on solar equipment and tax reductions on insurance could have financial repercussions.
Presently, GST is imposed at four primary slabs: 5, 12, 18, and 28 percent. Essential goods and food are taxed at the lower spectrum, while luxury items and sin products are categorized in the highest slab with an added cess.
The Centre's new reform initiative aims to streamline the system, primarily focusing on the 5 and 18 percent rates, alongside a unique 40 percent levy on select items such as sin goods.
The group of ministers engaged in rate rationalization and insurance is conducting two days of discussions to refine these alterations.
The GoM on insurance is specifically exploring options to lower or eliminate taxes on premiums, whereas the GoM on compensation cess is assessing the future of cess collections post the loan repayment phase.
The GST Council, comprising representatives from both the Centre and all states, is anticipated to address the proposals next month.
Prime Minister Narendra Modi has revealed that the introduction of the new GST reforms is slated before Diwali.
Point of View
The proposed GST exemption on health and life insurance signifies a crucial opportunity for India to bolster its insurance market. The initiative, while met with mixed reactions from states, reflects a growing recognition of the need to make insurance more affordable and accessible to the masses. This approach aligns with national interests in enhancing public welfare and securing financial protection for citizens.
NationPress
09/10/2025
Frequently Asked Questions
What is the purpose of the GST exemption proposal?
The GST exemption proposal aims to make health and life insurance premiums more affordable, thereby increasing insurance penetration in India.
Who confirmed the GST exemption proposal?
The proposal was confirmed by Bihar Deputy Chief Minister Samrat Choudhary.
What will happen next with this proposal?
The recommendation will be presented to the GST Council for a final decision after consultations with states.
What concerns have been raised regarding the proposal?
Some states have expressed concerns about potential revenue losses resulting from the exemption.
When is the rollout of new GST reforms expected?
Prime Minister Narendra Modi announced that the rollout of the new GST reforms is targeted before Diwali.
