By News18,Varun Yadav
Copyright news18
GST On Insurance Premium: In a major relief, the GST Council, led by Finance Minister Nirmala Sitharaman, announced that health and life insurance premiums will be exempt from GST. It means customers will not need to pay any GST on premiums paid for health and life insurance, making it cheaper and affordable from Monday, September 22.
“All individual health insurance, along with reinsurance thereof; and all individual life insurance, along with reinsurance thereof, have been exempt from GST,” according to an official release.
Earlier, health and term insurance products attract a GST rate of 18 per cent.
Services of individual health and life insurance business provided by insurers to the insured, where the insured is not a group, are included within the ambit of the exemption, CBIC explained. When these services are provided to an individual, or to an individual with his/her family, the same will be exempted.
How Much Will Your Insurance Premium Fall?
According to a report by HSBC Securities and Capital Markets (India), the full exemption could reduce health insurance premiums by around 15 per cent. The expense ratios of insurers will also play an important role in determining transmission.
However, according to the HSBC report, the government may face a revenue shortfall of $1.2-1.4 billion annually from GST on premiums if exemptions are granted, noted the report.
While lower premiums are expected to boost demand, insurance companies could see a 3-6 per cent impact on combined ratios (CR) in the retail health segment, primarily due to slower repricing of renewals which may take 12-18 months.
