Senior citizens may receive some positive news soon. A Group of Ministers (GoM) has recommended removing GST on insurance premiums.
The final decision will be made in the upcoming GST Council meeting.
After the 54th GST Council meeting in September, a group was formed to discuss the proposal to exempt insurance premiums from GST.
This group has suggested eliminating GST on health insurance premiums for all senior citizens and on premiums for other health policies covering up to ₹5 lakh.
They have also recommended exempting all term life insurance premiums from GST. The next GST Council meeting is scheduled for November.
Background of the Proposal
The discussion about this matter began with a letter from Transport Minister Nitin Gadkari to Finance Minister Nirmala Sitharaman in July.
In his letter, he suggested abolishing GST on life and health insurance premiums. Although the letter was confidential, it later became public, leading to political responses.
Leaders like former Congress President Rahul Gandhi and Trinamool Congress’s Mamata Banerjee have called for the removal of GST on life and health insurance.
The GST Council formed the GoM after a meeting in early September.
They expected to decide on removing GST from health insurance premiums but chose to create the group for further evaluation.
Some states are concerned that insurance companies might keep the benefits for themselves instead of passing them on to customers if GST is removed.
Impact of Removing GST
Eliminating GST on insurance premiums could greatly benefit many people. Currently, insurance coverage in India is very low, with less than 4% of the population having insurance.
This percentage reflects the share of total insurance premiums in the country’s GDP.
In comparison, insurance penetration is higher in countries like America (11.7%), England (11.1%), and South Africa (12.2%), with a global average of around 7%.
Since the Covid pandemic, health insurance premiums have risen sharply due to high medical care costs.
Health inflation is growing much faster than general retail inflation, making it hard for many people to renew their health policies.
Some individuals are even asking insurance companies to reduce their coverage to lower their premiums.
If GST on health insurance is removed, it would provide significant relief, especially for senior citizens, who face high premiums.
