Centre Proposes GST Exemption for Life and Health Insurance

The Centre has suggested exempting individual life and health insurance policies from GST, currently set at 18%. Bihar Deputy Chief Minister, Samrat Choudhary, indicated the 13-member Group of Ministers (GoM) will present the proposal, part of broader GST reforms, to the GST Council by October end.

The Centre has proposed exempting individual life and health insurance policies from the Goods and Services Tax (GST), revealed Bihar Deputy Chief Minister and convenor of the insurance Group of Ministers (GoM), Samrat Choudhary, during a recent meeting.

Presently, health and life insurance premiums face an 18% GST levy. According to Choudhary, the GoM on life and health insurance is compiling a report that includes various state finance ministers' opinions, which will be submitted to the GST Council. He noted that while all members have agreed to lower rates, some states have presented differing viewpoints.

This proposal forms a segment of broader next-generation GST reforms intended to standardize tax rates at 5% and 18% based on product classification. The GoM, formed in September, includes representatives from 13 states and aims to deliver its findings to the GST Council by the end of October. In the 2023-24 fiscal year, the combined GST collection on health and life insurance premiums was significant.