GoM may Exempt GST on Insurance Premiums for Senior Citizens

The Group of Ministers (GoM) is considering exempting health and life insurance premiums up to Rs.5 lakh from GST, which might provide major financial assistance to senior citizens. The proposal that was presented at a recent GoM meeting, seeks to alleviate the financial burden on older policyholders, who frequently pay higher insurance premiums due to age and health issues.

Led by Bihar Deputy Chief Minister Samrat Chaudhary, the GoM’s suggestions focus on reducing insurance prices and expanding senior citizens’ access to healthcare. The GST Council will make the ultimate decision, and the report is expected to be delivered by the end of October 2024.

Proposal and Benefits Expected

Presently, health and life insurance premiums, including term life and family floater policies, are subject to an 18% GST. The GoM has proposed exempting senior citizens with policies under Rs.5 lakh from this tax, making healthcare and insurance more affordable.

Talking about the proposal, Chaudhary stated, “The goal is to provide relief to people, particularly senior citizens. The exemption would make sure that senior citizens are not burdened with excessive premium payments, allowing for better access to important healthcare services.”

The policies of Health insurance with coverage beyond Rs.5 lakh will continue to be subject to 18% GST. The proposed exemption would only apply to policies below that threshold, particularly those acquired by senior citizens.

Impact and Implications on Insurance Industry

If the GST Council approves the proposal, the insurance sector will see considerable changes. Reducing the tax burden on insurance premiums would encourage more people to get coverage while also promoting preventative healthcare by making policies more accessible.

With senior citizens as the principal beneficiaries, the exemption would have a positive impact on insurer rate structures, potentially driving up demand for specialized health policies among this population.

GST Council’s Decision Awaits

The GoM, which consists of ministers from 13 states, including Uttar Pradesh, Tamil Nadu, West Bengal, and Karnataka, will present its findings to the GST Council for final approval.

“Every member is committed to providing a sense of relief to those people, who are out there hoping a change would come. The council will make the final decision after reviewing our report,” Chaudhary stated.

The decision is scheduled to be made soon after the submission, possibly changing insurance affordability for seniors nationwide.

If enacted, this policy could set an example, encouraging more senior citizens to invest in comprehensive health insurance. Industry stakeholders will closely observe the council’s decision, which could influence future policy structures and tax policies.

This change demonstrates the government’s emphasis on financial inclusion in healthcare, as well as its commitment to ensuring that important health services remain accessible to vulnerable segments of society, including senior citizens.