Lok Sabha Question No. 89 (STARRED), answered on 2024-12-02
Subject: Eliminating GST on Term and Health Insurance
Ministry: FINANCE
Asked by: Thiru Dayanidhi Maran

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA STARRED QUESTION NO. *89

## TO BE ANSWERED ON MONDAY, DECEMBER 02, 20242024 /AGRAHAYANA 11, 1946  (SAKA)

## ELIMINATING GST ON TERM AND HEALTH INSURANCE

## *89. THIRU DAYANIDHI MARAN:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  proposes  to  reduce  or  eliminate  GST  on  term  and  health insurance, especially for senior citizens and individuals purchasing coverage upto Rs. 5 lakh; (b)  the  projected  impact  on  overall  GST  revenue  if  the  GST  on  term  and  health  insurance plans is reduced or removed and the details thereof;
- (c) the  manner in  which the Government will ensure that insurance companies pass on the benefits  of  any  GST  reduction  to  consumers,  rather  than  retaining  them  through  increased premiums;
- (d)  whether  the  Government  has  proposed  any  mechanism  or  Insurance  Regulatory  and Development Authority of India (IRDAI) has been empowered to monitor premium rates to ensure that companies align with GST reductions and pass on benefits to consumers in the event of revisions; and
- (e)  whether  GST  reduction  on  health  insurance  will  be  a  step  towards  making  healthcare more equitable and any additional measures which might support it?

## ANSWER

## MINISTER OF FINANCE SHRIMATI NIRMALA SITHARAMAN

(a), (b), (c), (d) & (e): A statement is placed on the Table of the House.

*****

STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO.  89  RAISED  BY  THIRU  DAYANIDHI  MARAN  FOR  2 ND DECEMBER  2024  ON 'ELIMINATING GST ON TERM AND HEALTH INSURANCE'

(a):  GST  rates  and  exemptions  on  all  services  (including  health  and  life  insurance)  are prescribed  on  the  recommendations  of  the  GST  Council  which  is  a  constitutional  body comprising of members from both the Union and State/UT Governments.

The issue of GST on life and health insurance was placed before the GST Council in its 54th Meeting held on 09th September 2024 at New Delhi. After detailed deliberations, the GST Council recommended to constitute a Group of Ministers (GoM) to holistically look into the issues  pertaining  to  GST  on  life  insurance  and  health  insurance.  Accordingly,  a  Group  of Ministers (GoM) on Life and Health Insurance  was constituted under the Chairmanship of Sh. Samrat Chaudhary, Hon'ble Deputy CM, Bihar. The first meeting of the GoM was held on  19th  October  2024  at  New  Delhi  where  the  issues  of  GST  rates  on  health  and  life insurance policies were discussed.

(b): Revenue loss depends on the GST rate reduction. In absence of any recommendation for reduced rate, no projection can be made for the impact on overall GST revenue.

(c): As the GST rates are applicable over and above the insurance premium, if the GST rate is reduced, it is expected to benefit the policyholder directly especially in a competitive market with many insurers as the cost of insurance will reduce to that extent.

(d): An effective regulatory framework in the form of regulations on insurance products and master  circulars  issued  thereon  is  in  place  to  monitor  insurance  products,  which  includes designing  insurance  products  and  setting  insurance  premiums.  GST,  at  applicable  rates,  is collected separately in addition to insurance premium.

(e):  As  stated  earlier,  the  matter  of  review  of  GST  rates  on  life  and  health  insurance  is pending before the GoM. If a recommendation for a reduction in GST rate is made by the GST Council, the cost of insurance to the policy holder is expected to come down on account of reduction in GST.