GST reduction on term, health insurance premiums: BIG decision - What sources say

GST On Health Insurance , GST On Term Insurance : Government has held a key meeting with insurance regulator and industry stakeholders on the issue of GST reduction on health and term insurance premiums. Sources told ET NOW that officials from the Department Of Financial Services (DFS), Insurance Regulatory and Development Authority (IRDAI) and industry experts met on Tuesday to discuss GST reduction proposal for insurance premium.  Sources said that insurers and DFS have likely reached a consensus for 12 per cent GST on health and term insurance premiums.

Insurers are said to have agreed to pass on the benefits to customers at 12 per cent GST rate, sources said

The consensus for 12 per cent GST on insurance premium was reached after insurers expressed inability to pass benefit to policy holders at 5 per cent GST without input tax credit. At 12 per cent GST rate, the revenue loss for the government is estimated at Rs 7000 crore. The consensus proposal will now be sent to GST Council for the final approval. Notably, the GST Council during its December 2024 meeting deferred the decision on insurance premium. The current GST rate on heath and term insurance stands at 18 per cent.