GoM favours no GST on term life insurance, health insurance for senior citizens

Recently, a significant meeting of the Group of Ministers was held under the chairmanship of Bihar's Deputy Chief Minister, Samrat Chaudhary, to discuss the issue of GST exemptions on health and life insurance premiums. It was proposed in the meeting that health insurance premiums up to ₹5 lakh should be completely exempt from GST, especially for senior citizens. This decision was taken to alleviate financial burdens and ensure access to essential health coverage for the public.

The meeting also discussed that an 18% GST would continue to apply to health insurance coverage exceeding ₹5 lakh. This proposal is expected to provide relief to individuals, particularly senior citizens who often face high medical expenses. The Group of Ministers emphasized that this step would not only enhance financial security but also make health services more accessible.

Members suggested considering exemptions for term life insurance premiums to benefit family members fully. Additionally, it was decided to maintain the GST rate at 18% for other insurance policies. It was made clear that all members supported the decision for the public's benefit.

Notably, the Group of Ministers is required to submit its report by October 30, after which the GST Council will discuss the issue in its upcoming meeting, likely next month. Currently, an 18% GST applies to health insurance, term insurance plans, and unit-linked insurance plans, while the GST rate for endowment plans is different. It is 4.5% for the first year and reduces to 2.25% from the second year. The GST rate for single premium annuity policies is 1.8%, which is the same for all age groups. Thus, the proposed changes are expected to benefit the public on a wide scale.