The Goods and Services Tax (GST) Council’s recent move to consider exempting GST on premiums for life and health insurance is poised to have a transformative impact on India’s insurance landscape. Currently, insurance premiums are taxed at 18%, making policies costlier and, for some, unattainable. The proposed exemptions would provide essential relief, especially for senior citizens and individuals with limited coverage, potentially reshaping the insurance sector by increasing adoption rates, diversifying product offerings, and enhancing policyholders’ financial stability.
“The proposed exemption of GST on life and health insurance premiums is a significant development for the insurance sector and its stakeholders,” says an industry expert. “Lowering the tax burden on insurance premiums, particularly for health coverage up to Rs 5 lakh and term life policies, will make insurance more accessible and affordable to a broader population. For customers, this exemption will directly reduce out-of-pocket expenses, providing financial relief, especially to senior citizens and those with limited coverage. This will not only encourage first-time buyers to consider insurance but also incentivize existing policyholders to upgrade to higher coverage or opt for additional benefits says, Vikrant Agrawal co-founder, Care.fi”
Additionally, Artemis Hospital Gurgaon has expressed strong support for the proposal. “Artemis Hospital Gurgaon welcomes the recent proposal by the Group of Ministers (GoM) to exempt GST on life and health insurance premiums, particularly for senior citizens,” they stated. “This initiative aims to alleviate the financial burden on a demographic that often faces higher healthcare costs. By removing the 18% GST on these essential services, we can make insurance more accessible and affordable, thereby promoting better health outcomes.”
This exemption presents an opportunity for insurance providers to introduce more competitively priced, innovative products tailored to a wide range of needs, fostering greater market penetration. “At Care.fi, we see this development as an opportunity to further strengthen our partnerships within the healthcare financing ecosystem,” added by Vikrant Agrawal “This GST exemption will recalibrate the industry towards sustainable growth, promote healthy competition, and enhance the overall value chain.”
Artemis Hospital emphasizes that this exemption is more than a financial relief—it acknowledges the importance of health security for an aging population. “The potential GST exemption on life and health insurance premiums could herald a new chapter in India’s healthcare landscape, fostering a culture of health awareness and financial security among senior citizens. We recommend extending this benefit across all sections of society and look forward to seeing this proposal materialize into an actionable policy benefiting all stakeholders.”
Ultimately, these GST changes aim to bridge gaps in insurance coverage, making it more accessible to a broader audience. By lowering insurance costs, the government can spur sector growth, drawing in new customers and encouraging existing ones to invest in their financial security.
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