GOVERNMENT MAY SOON REMOVE GST ON LIFE INSURANCE AND HEALTH INSURANCE PREMIUMS
A proposal has been made to exempt premiums for life and health insurance from Goods and Services Tax (GST), a move that could bring down costs and boost insurance penetration. At present, every time you buy a new life or health insurance plan or renew an existing one, you pay 18% GST on the premium. This applies to individual policies as well as family floaters, making GST a significant component of the overall cost.
Under the new proposal, the entire GST component would be removed. If approved by the GST Council, you would pay only the base premium quoted by your insurer, with no additional tax. This would bring down the premium cost by 18%. While life and health insurance generated about Rs 8,262 crore GST in FY24, health insurance generated about Rs 1,500 crore GST in FY24. Therefore, eliminating GST from insurance would mean a revenue shortfall of nearly Rs 10,000 crore for the government.
Some of the stocks that will benefit from this policy change are -