GST likely to be reduced on health and life insurance premiums: Report
A recent report suggests that the GST rate on health and life insurance premiums may be reduced from 18% to 5%. This proposal has been submitted to the GST rationalisation committee, which is set to meet on August 22. While the committee is considering the reduction, it is not in favor of completely exempting GST on these premiums.
The report indicates that Minister Nitin Gadkari had earlier urged Finance Minister Nirmala Sitharaman to remove the 18% GST on these premiums, describing it as a tax on life’s uncertainties. The government has reportedly collected nearly ₹24,000 crore in GST from the health and life insurance sector over the last three years.
Finance Minister Sitharaman mentioned that a significant portion of the GST collected from insurance premiums goes to the states, and while there have been calls to reduce the GST rate, no state has suggested reducing the share that goes to them.
The potential reduction has positively impacted the stock prices of major insurance companies like HDFC Life Insurance, Life Insurance Corporation, SBI Life, and ICICI Prudential.
This development is still in the proposal stage, and any changes will depend on the decisions made by the GST Council and subsequent notifications..
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