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Major Update About Removal Of GST From Health & Life Insurance
Updated: 27-11-2024 at 3:31 PM
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Health and life insurance is one of the most secure ways through which an individual can safeguard their own and their family’s lives. However, the premium attached to health and life insurance policies is not something everyone can afford. Along with this, a certain amount of Goods and Service Tax (GST) is also charged, making it financially burdening for the people at times.
After the establishment of the Group of Ministers (GoM) by the GST Council, the exemption of GST from health and life insurance policies was one of the agendas of GoM. Recently, Shri Debashish Panda, the chairman of the Insurance Regulatory Authority of India (IRDAI) has raised this request into consideration of the panel. He emphasised the need to lift GST from health and life insurance and adjust the Input Tax Credit (ITC).
Read More: Comprehensive Government Health Insurance Plans
Current GST On Health And Life Insurance
At present, the GST rate imposed on health and life insurance is 18% which the policyholders are required to pay. This is one of the contributing factors that doesn’t let people buy health and life insurance policies, especially those who come from the middle or low-income groups of society.
Health and life insurance policies are crucial that everyone should have as a protective shield for their lives. However, the GST laws have labelled it as a ‘service’ because of which not everyone can enjoy its benefits.
How Would It Help?
If GST were exempted from health and life insurance policies, it would help people in major ways such as:
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Accessible and affordable: The removal of GST from health and life insurance would make it very easy for people who are interested in buying one but can’t because of excess financial burden.
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Increased growth in the sector: As more and more people get the chance to opt for health and life insurance policies, the insurance sector will observe exponential growth and contribute to the nation’s economy.
How Is Input Tax Credit Connected?
Usually, the Input Tax Credit (ITC) is used by businesses to claim credit on the GST paid at the time of purchases but in the insurance sector, ITC can lower the prices of the premiums so that people can opt for health and life insurance policies.
ITC can help the policyholders as it would shift the initial financial burden of tax paid by the policyholder. It would allow people to invest in health and life insurance policies without having to worry about any excess financial baggage.
Conclusion
The proposal for the removal of GST from health and life insurance premiums with Input Tax Credit (ITC) would ease the lives of people and would allow many more to invest in a protective shield for their lives.
Stay updated with Jaagruk Bharat to get the latest information on government healthcare schemes and more, and reach out to us via our community page if you have any questions.
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