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GST Council Meeting: GoM proposes to reduce GST rate to 5% for all individual health insurance services


The upcoming 55th GST Council meeting will review and review the current Goods and Services Tax (GST) structure on health and life insurance. The Group of Ministers (GoM) on Health Insurance submitted its recommendations to the tax officials of the state and central governments on December 16. The report will be reviewed by the GST Council during its meeting in Jaisalmer.

Key recommendations:

  • Exemption for pure term life insurance: The Government of Mexico has proposed a GST exemption for pure term life insurance policies covering family members. This would mean that these policies will not be subject to GST, reducing the financial burden on policyholders.
  • Senior Health Insurance Exemption: Another important recommendation is exemption from GST on health insurance policies specifically for senior citizens, which would help make healthcare more affordable for the elderly population.
  • Reduction of GST rate on individual health insurance: The Government of Mexico also proposed to reduce the GST rate on all individual health insurance policies to 5 percent, but without the Input Tax Credit (ITC) option. This would aim to reduce the cost of health insurance premiums for people while keeping the process simple.

These proposals, if adopted, could significantly impact the structure of the GST on life and health insurance, potentially reducing premiums and increasing the accessibility of insurance products to more people.

Currently, 18 per cent GST is charged on the insurance premium. Sources indicated that the Council is likely to approve a proposal to exempt health and life insurance policies of up to Rs 5 lakh from GST. The goal is to reduce the tax burden on low and middle income groups. It is also likely to provide similar exemptions for senior policies.

The GST Council, headed by Union Finance Minister Nirmala Sitharaman and members from all states and union territories, is scheduled to meet in Jaisalmer on December 21.



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