Your health, life insurance premiums are about to become cheaper
What's the story
The Group of Ministers (GoM) on health and life insurance has tentatively agreed that Goods and Services Tax (GST) should be exempted from these insurance policies. The proposal is likely to be presented at the upcoming GST Council meeting. The GoM broadly supports the Indian government's plan to exempt all individual life and health insurance policies from GST, according to CNBC-TV18.
Policyholder protection
Concerns raised by states
However, some states such as Karnataka, West Bengal, Kerala, Punjab, and Tamil Nadu have raised concerns that the exemption would only be effective if insurers directly pass on the benefit to policyholders. The GoM members stressed that any GST exemption should primarily benefit the policyholders and not insurance companies. They also discussed ways to ensure a complete exemption's benefits are effectively passed on to customers.
Financial implications
Estimated revenue impact
The estimated revenue impact of the Indian government's proposal is around ₹9,900 crore annually. The proposal includes granting GST exemption to all individual life insurance policies and reinsurance, as well as all individual and family floater health insurance policies along with their reinsurance. The final decision on this matter will be taken by the GST Council in its upcoming meeting.