GST Exemption on Insurance: A Boost for Policyholders?

*💰 GST Exemption on Insurance: A Boost for Policyholders? 💸*The GST Council has announced a significant decision to exempt individual health and life insurance policies from the Goods and Services Tax (GST), effective September 22, 2025. This move aims to make insurance more affordable and increase penetration in India.*Key Highlights 🔍*- *GST Exemption*: Individual health and life insurance policies, including reinsurance, will be exempt from GST.- *Effective Date*: The exemption will be applicable from September 22, 2025.- *Current GST Rate*: Health and life insurance policies currently attract an 18% GST rate.- *Expected Premium Reduction*: Premiums are expected to decrease by around 15%, making insurance more affordable .*Benefits for Policyholders 🤝*- *Increased Affordability*: Lower premiums will make insurance more accessible to a wider audience.- *Improved Penetration*: The exemption is expected to boost insurance penetration in India, where coverage remains relatively low.- *Savings*: Policyholders can expect to save on premiums, which could lead to increased demand for insurance products.*Potential Impact on Insurers 📊*- *Loss of Input Tax Credit*: Insurers will no longer be able to claim input tax credit on expenses, which could lead to increased costs.- *Premium Hikes*: Insurers might increase base premiums to offset the loss of input tax credit, potentially reducing the benefits of the exemption for policyholders.- *Re-pricing and Product Re-design*: Insurers may need to re-price or re-design their products to absorb the costs and maintain profitability .*Expert Insights 💡*- *Akash Parwal, CEO of Square Insurance*: “Removing GST from health and life insurance would directly reduce the cost of premiums, making insurance products more affordable and accessible.”- *Dr. Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance*: “The GST Council’s decision to bring health insurance under the NIL GST bracket is a landmark move that will make healthcare protection more affordable and accessible for millions of Indians.”