People who are waiting for the insurance policy to be cheap may soon get good news. In the next meeting of the GST Council, it may be decided to reduce tax on insurance premiums. For a long time, people have been waiting for GST to decrease at the premium of Life Insurance and Health Insurance. Sources associated with the case say that the GST Council may meet before the monsoon session of Parliament. In this, the Group of Ministers can decide to give a complete discount to the Term Life Insurance Policy from GST. Apart from this, Senior Cities can also get great relief in the premium of the health policy.
Insurance Regulator IRDAI has already revealed its opinion to the GST Council. Earlier, the Insurance Regulator’s opinion was sought on this issue in the GST Council meeting held in December 2024. It is said that this opinion will play a big role in the GST Council’s decision. Sources said that the Group of Ministers (GOM) on insurance can re -submit their first recommendations. Earlier, he had advised to completely eliminate the tax on term life insurance. He had also recommended the senior cities to give relief in the premium of health insurance.
GOM also recommended to give tax relief to health policy up to Rs 5 lakh. The GOM believed that this would increase the interest of the common man in buying health insurance. Currently, 18 percent GST is imposed on the premium of life and health policy. Experts believe that reducing GST on insurance policy will make them cheap, which will increase the interest of common people. However, this will cause the government to suffer losses in revenue. According to an estimate, the government may lose a revenue of about Rs 2,600 crore every year.
Insurance companies had expressed concern over the proposal to reduce GST on premium. They believe that this will lead to the loss of input tax credit. Currently, insurance companies claim tax credit on expenses such as IT infrastructure, marketing and administrative experiences. This claim is claimed on the amount from GST from policyholders. Insurance companies will have to lift losses due to reducing GST on premium. They have to bear the burden of their expenses themselves. With this, they will have to increase the premium.
