The Indian government is reportedly working on a major relief for policyholders by considering removal of the 18% GST on life and health insurance premiums. The move, if cleared, will be positioned as a Diwali gift to millions of families and could significantly lower the cost of protection plans.
Insurance penetration in India remains low, with most households underinsured. Experts believe that high taxes on premiums often discourage middle-class and rural families from buying adequate cover. Removing GST could lower premiums and drive greater adoption.
Government’s View
Officials from the Finance Ministry have hinted that a GST exemption on insurance premiums is under active discussion. The move is expected to support the government’s broader goal of financial inclusion and universal health coverage.
A senior official was quoted saying, “Insurance should be treated as a social necessity, not a luxury. Reducing the GST burden will make it affordable for all.”
Industry Response
Insurance companies have welcomed the proposal, noting that it could:
- Boost policy sales during the festive season.
- Encourage first-time buyers to enter the market.
- Promote long-term financial security in rural and semi-urban areas.
However, some industry experts also caution that a complete GST waiver could affect insurers’ ability to claim input tax credit, which helps them manage operational costs.
Impact on Consumers
For families, the difference could be substantial. For example:
| Premium (per year) | With 18% GST | If GST is Removed | Savings |
|---|---|---|---|
| ₹10,000 | ₹11,800 | ₹10,000 | ₹1,800 |
| ₹25,000 | ₹29,500 | ₹25,000 | ₹4,500 |
| ₹50,000 | ₹59,000 | ₹50,000 | ₹9,000 |
Such savings could make insurance more appealing to middle-class households, particularly at a time when inflation has eroded disposable incomes.
Why It Matters for eBharat Readers
This proposed GST relief isn’t just a policy update—it could directly reduce your insurance costs and make it easier to safeguard your family’s future. Whether you’re planning to buy a new term plan, health cover, or renew an existing policy, the timing might be in your favour.
With Diwali around the corner, all eyes are on the government to see if this tax relief will indeed become a reality—lighting up the insurance sector as well as households.
✅ CTA (Social Sharing)
👉 Do you think insurance should be tax-free like basic food items? Share your opinion with us on eBharat.com Facebook or X (Twitter).
