A potential GST waiver on insurance in India is creating ripples. Experts have mixed views on whether it will truly benefit consumers. The move could cut
costs, yet may also hike prices. Let’s find out more!
GST Exemption Proposed
The GST Council is considering a full exemption on term life insurance premiums for all and health insurance premiums for senior citizens (over 60). This aims to boost insurance adoption, especially among the elderly and middle-class families in India. Many believe this change can bring significant savings.
Impact on Consumers?
The move could lead to savings of up to 18% annually for individuals. This makes coverage more affordable, particularly for senior citizens. With insurance premiums rising sharply by 20–25% in certain cases, this could be a welcome relief and could expand the reach of insurance in India.
Industry Concerns Emerge
Experts are worried about the elimination of input tax credit (ITC), which could impact operational expenses and compress margins. Insurers have expressed that a zero GST could increase pricing, as the benefits of ITC will not be available. This might lead to a slightly different scenario.
Penetration & Challenges
Less than 40% of Indians have health insurance, and life insurance penetration is below 4%. High age-related premiums, inflation, and GST have hampered growth. A zero GST could be transformative, as it might increase adoption, especially in a country with a large and growing elderly population.
Optimism, Yet Caution
While the move is viewed positively, particularly for consumers and overall industry growth, experts remain cautious. They advise insurers to adapt to mitigate any potential losses. Industry players expect this change to expand penetration and encourage wider insurance adoption among seniors and the middle class.
