In a major move that could bring relief to millions of middle-class families, the Indian government is considering slashing Goods and Services Tax (GST) rates on two crucial segments — small petrol and diesel cars, and insurance premiums. Officials say the proposal aims to boost consumption and sentiment in the run-up to the Diwali festival season.
| Category | Current GST | Proposed GST |
|---|---|---|
| Small Petrol/Diesel Cars | 28% | 18% |
| Health Insurance Premium | 18% | 5% or 0% |
| Life Insurance Premium | 18% | 5% or 0% |
If implemented, this move will make small cars more affordable for middle-income families and encourage higher car sales across urban and semi-urban markets. The insurance sector could also see a surge in new policy purchases as lower GST will significantly reduce the effective premium cost for consumers.
Industry insiders believe such a cut will not only improve insurance penetration in India, which remains under 4% of GDP, but also encourage more young people to buy term and health plans.
According to government sources, the GST Council is actively reviewing the proposal, and a final decision is likely before Diwali to coincide with the festive sales season.
- For Car Buyers: Lower GST will make small petrol and diesel cars more affordable, boosting demand.
- For Policyholders: Health and life insurance premiums will become cheaper, improving accessibility.
- For the Economy: Stronger consumption during the festive season can provide a much-needed push to growth.
Also read: IRDAI Proposes Internal Ombudsmen Inside Insurers to Resolve Complaints Faster
With both the automobile and insurance industries watching closely, consumers may receive a Diwali gift that brings not just festive cheer, but long-term financial security as well.
