new delhi: Life insurance and health insurance premia would come down as such products are now exempt from Goods and Services Tax (GST).
Announcing the outcome of 56th GST Council meeting, Finance Minister Nirmala Sitharaman on Wednesday said that all individual life insurance policies whether term life, ULIP or endowment policies and subsequent reinsurance are exempt from GST.
All individual health insurance policies including family floater policies and policies for senior citizens and reinsurance thereof will also be exempt from GST, she said.
Since its inception in July 2017, GST at the rate of 18 per cent is levied on premium paid towards health insurance and life insurance.
“We will make sure that companies pass on GST rate reduction and make insurance affordable for the common man and increase the insurance coverage in the country,” she said.
She further said that the new rates would be effective from September 22, the first day of Navaratri.
The government has collected Rs 16,398 crore from goods and services tax (GST) levied on healthcare and life insurance in FY24.
Of this, Rs 8,135 crore came from life insurance and Rs 8,263 crore from health insurance. Additionally, Rs 2,045 crore was also raised as GST from re-insurance on life and health insurance last fiscal, including Rs 561 crore from reinsurance on life and Rs 1,484 crore on health care.
GST on healthcare and life insurance services brought in Rs 16,770 crore in FY23, including Rs 9,132 crore from life insurance and Rs 7,638 crore from healthcare insurance.
The 56th GST Council, chaired by Union Finance Minister and comprising ministers from all states, has agreed on two tax rates of 5 and 18 per cent by moving products from the current 12 and 28 per cent slab to lower rates. A special 40 per cent rate would be levied on a select few items.