Good news for insurance buyers! A group of ministers (GoM) has proposed exempting individual insurance policies from GST, potentially making premiums more
affordable for millions in India.
GST Exemption Proposed
The GoM, led by Bihar's deputy chief minister Samrat Choudhary, wants to exempt individual health and life insurance premiums from the current 18% GST. This move, part of GST 2.0 reforms, aims to reduce costs for policyholders across India. This exemption is for individual policies, while commercial and group policies may stay taxed.
Impact on Consumers
The proposal could lead to significant savings for policyholders, with millions of households potentially benefiting from reduced premiums. This initiative is expected to provide substantial relief to the public. The estimated annual revenue loss due to this exemption could be Rs 9,700 crore, but is seen as a step towards affordable insurance.
Council's Decision Awaited
The GST Council, which includes representatives from all states, will make the final decision, with a meeting expected in September. While most states broadly support the idea, some have expressed concerns about ensuring the tax cut benefits reach the consumers. The government hopes the reformed regime will make goods more accessible.
Wider GST Reforms
This proposal is part of broader GST 2.0 reforms, aiming to simplify the tax structure and ease the burden on businesses. The reforms also include simplifying tax slabs to 5%, 18%, and a special 40% rate for certain goods. Finance Minister Nirmala Sitharaman described GST 2.0, focusing on reforms, rationalisation, and ease of business.
Insurance Sector Focus
Insurance stocks like HDFC Life and SBI Life are in focus after the GoM's suggestion. The sector's outlook could be improved by this potential change. This potential change will be beneficial for the Insurance sector and will also help the consumers. The move may have a positive impact on the sector, with market analysts watching closely.
