The Insurance Regulatory and Development Authority of India (IRDAI) has submitted its recommendations on goods and services tax (GST) relief for life and health insurance premiums, bringing the long-awaited decision closer to resolution.
The Group of Ministers (GoM) on insurance is set to meet in April to finalize its report before submitting recommendations to the GST Council, a senior government official confirmed.
GST Relief for Insurance Likely in May
With the IRDAI on board, the GST Council is expected to take up the matter in its next meeting, likely to be held at the end of April or early May. The Council will consider proposals to either reduce or exempt GST on life and health insurance premiums.
“The IRDAI has submitted its comments on GST relief for life and health insurance. Now that IRDAI is aligned with the proposal, the GoM on insurance will hold its meeting in April to finalize and submit its recommendations to the GST Council. The GST Council is expected to provide relief in its upcoming meeting,” the official told.
The source also highlighted that the states had already reached a consensus on granting GST relief to the insurance sector. However, a decision was postponed in the December 21 GST Council meeting due to the absence of IRDAI’s official input.
GoM on Insurance to Submit Final Report
The GoM, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, will finalize its recommendations after reviewing IRDAI’s comments. The 13-member GoM includes key finance and revenue ministers from various states, including:
- Suresh Kumar Khanna (Uttar Pradesh Finance Minister)
- Chandrima Bhattacharya (West Bengal Finance Minister)
- KN Balagopal (Kerala Finance Minister)
- Gajendra Singh (Rajasthan Health Minister)
- Krishna Byre Gowda (Karnataka Revenue Minister)
- Pramod Sawant (Goa Chief Minister)
The panel’s report will play a crucial role in shaping the GST relief framework for life and health insurance policies.
Impact on Policyholders and Insurance Sector
If approved, the reduction or exemption of GST on life and health insurance premiums will make policies more affordable for policyholders, potentially increasing insurance penetration in India. Currently, life and health insurance premiums attract an 18% GST, making them relatively expensive for middle-class consumers.
The decision is being closely watched by industry stakeholders, as a reduction in GST could significantly boost the insurance sector and encourage more individuals to invest in health and life coverage.
