A Potential Change
The upcoming 55th GST Council meeting is expected to focus on the proposal to eliminate Goods and Services Tax (GST) on health insurance premiums. This potential change has been recommended by the Group of Ministers (GoM) on Life & Health Insurance, which met in mid-October.
The GoM proposed a GST exemption for pure term life insurance covering family members and individuals. Additionally, they recommended a tax exemption on all health insurance policies for senior citizens.
Exempting all individual health insurance premiums (revenue loss of Rs 3,495 crore)
Exempting premiums for senior citizens and those with coverage up to Rs 5 lakhs (revenue loss of Rs 2,110 crore)
Exempting premiums only for senior citizens (revenue loss of Rs 645 crore)
Reducing the GST rate to 5% for all individual health insurance services (revenue loss of Rs 1,730 crore)
The GoM ultimately decided to leave the final decision to the GST Council, highlighting the need to weigh both financial and social impacts.
The 55th GST Council meeting is scheduled for the last week of December in Rajasthan. This will be the first meeting held outside New Delhi since June 2022. In addition to the health insurance premium decision, the Council will also review the GoM's Rate Rationalisation report and the fitment committee's recommendations.