Your life insurance premiums may become cheaper soon
What's the story
The Goods and Services Tax (GST) Council will review the recommendations of the Group of Ministers (GoM) on insurance at its 55th meeting on Saturday (December 21).
The GoM has recommended full exemption of GST on individual term life insurance policies and their reinsurance, which are taxed at 18% currently.
If approved, this may have an annual revenue implication of ₹202 crore for term life insurance and ₹96 crore for reinsurance.
Tax relief
GST exemption for senior citizens' health insurance proposed
The GoM has also recommended exempting individual health insurance policies for senior citizens from the existing 18% GST.
This would be for policies providing coverage up to ₹5 lakh, including their reinsurance premiums.
The annual revenue impact of this change is estimated to be ₹2,110 crore.
However, the GoM recommends retaining 18% GST on group term life insurance and further examination by the Fitment Committee if the Council deems necessary.
Pending decision
GST rates for health insurance for PMI undecided
The GoM has not decided on GST rates for health insurance for Persons with Mental Illness (PMI). It suggests that the matter be examined by the Fitment Committee with the Department of Financial Services.
The proposed changes won't impact health insurance premiums for non-senior citizens with coverage above ₹5 lakh per annum.
The GST Council will take a final call on these recommendations in its next meeting, where changes may also be considered before ratification.