GST Council Expected to Exempt Health, Term Life Insurance from Tax Implication

New Delhi, November 18, 2024 - The Goods and Services Tax (GST) Council is expected to reconsider its stance on exempting health and term life insurance products from GST tax implication after the Group of Ministers (GoM) suggested such a move.

The report suggests that the GST Council may discuss this topic during its upcoming meeting in November, following the recent state elections. Currently, health and term life insurance products are taxed at 18%.

Industry experts have expressed concerns over whether insurers will be able to fully pass on the benefits of an exemption from GST imposition to policyholders. Rising loss ratios for insurers in their health portfolio pose a challenge.

Debasish Panda, an economist, believes that "typically, the Government takes steps to ensure that the benefits of such exemptions are passed on to policyholders." He mentioned that if the GST exemption receives Input Tax Credit (ITC), it could lead to a direct benefit transfer to policyholders. This would provide impetus to demand for health and term life insurance policies.

Panda emphasized that an exemption from GST tax implication would significantly influence the policy-makers, ultimately benefiting both policyholders and the economy as a whole.

With stakeholders awaiting an update on this crucial topic, the meeting of the GST Council in November promises to shed light on the potential prospects of exempting health and term life insurance products from GST.