Context:
The Centre has proposed to exempt individual life and health insurance policies from the ambit of Goods and Services Tax (GST), aiming to make insurance more affordable and boost financial inclusion.
Key Highlights:
- Proposal: Complete GST exemption on individual life and health insurance policies.
- GoM Approval: The 13-member Group of Ministers (GoM) on health and insurance, headed by Bihar Deputy CM Samrat Choudhary, has endorsed the proposal.
- Objective:
- Reduce financial burden on consumers.
- Promote financial inclusion, strengthen healthcare, and support schemes like Ayushman Bharat.
GST on Life and Health Insurance Policies for Individuals
- Life Insurance Policies
- GST Rate: 18% on the insurance premium.
- Premium Components: GST is charged on the premium paid by the policyholder, excluding any investment component in ULIPs.
- Example: If annual premium = ₹1,00,000 → GST = ₹18,000.
- Health Insurance Policies
- GST Rate: 18% on the premium for individual health insurance.
- Policy Type: Applies to standalone health policies and riders like critical illness cover.
- Family Floater: GST charged on the total premium for the family.
- Exemptions / Clarifications
- No GST on maturity or claim payouts.
- GST is applicable only on premium payments, not on bonuses or surrender amounts.
- Corporate/group health insurance may attract different GST rules (still 18% generally).
