Lok Sabha Question No. 78 (UNSTARRED), answered on 2024-11-25
Subject: GST on Healthcare and Life Insurance
Ministry: FINANCE
Asked by: Shri Raja Ram Singh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE LOK SABHA UNSTARRED QUESTION NO.78

## TO BE ANSWERED ON MONDAY, NOVEMBER 25, 2024 /AGRAHAYANA 4, 1946 (SAKA)

## GST ON HEALTHCARE AND LIFE INSURANCE

## 78. SHRI RAJA RAM SINGH:

Will the Minister of FINANCE be pleased to state:

- (a) the details of revenue earned by the Government from GST on cancer and other lifesaving drugs during the last five years;
- (b) the revenue generated from GST on insurance and related items during the last five years;
- (c) whether the Government has taken any steps towards rate reduction of GST on health and life insurance after numerous complaints of high GST rates from the beneficiaries; and
- (d)  the  rationale  behind  having  a  high  GST  rate  on  health  insurance,  life  insurance  and lifesaving drugs in comparison to luxury items like diamonds?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a):  The  data  regarding  revenue  earned  on  cancer  drugs  and  life-saving  drugs  is  not maintained.  However,  specified  cancer,  lifesaving  and  other  critical  medicines  attract concessional GST rate of 5%.
- (b): The revenue generated from GST on Healthcare and Life insurance services is tabulated below:
- (c):  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.

| GST collected in cash* (Rs. Crores)   | GST collected in cash* (Rs. Crores)   | GST collected in cash* (Rs. Crores)   | GST collected in cash* (Rs. Crores)   | GST collected in cash* (Rs. Crores)   |
|---------------------------------------|---------------------------------------|---------------------------------------|---------------------------------------|---------------------------------------|
| Category                              | Insurance                             | Insurance                             | Re-insurance                          | Re-insurance                          |
| FY                                    | (Life)                                | (Health)                              | (Life)                                | (Health)                              |
| 2019-2020                             | 1,106                                 | 995                                   | 12                                    | 10                                    |
| 2020-2021                             | 2,160                                 | 1,350                                 | 15                                    | 18                                    |
| 2021-2022                             | 8,541                                 | 5,356                                 | 337                                   | 826                                   |
| 2022-2023                             | 9,132                                 | 7,638                                 | 530                                   | 963                                   |
| 2023-2024                             | 8,135                                 | 8,263                                 | 561                                   | 1,484                                 |

* Data Source: GSTN.

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. 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.

(d): GST  rates and exemptions on all services and goods 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.

At present, GST on health insurance services is levied at standard rate, i.e., 18 per cent.

Specific health insurance schemes catering to the needs of differently abled and economically weaker sections of the society, such as Rashtriya Swasthya Bima Yojana (RSBY), Universal Health Insurance Scheme, Jan Arogya Bima Policy, Niramaya Health Insurance Scheme are exempt from GST.

Pure  term  life  insurance  services,  i.e.  insurance  policies  not  involving  saving/investment element, are also at standard rate i.e. 18 per cent.

Life  insurance  services  provided  under  specific  schemes  such  as  Varishtha  Pension  Bima Yojana,  Pradhan  Mantri  Jeevan  Jyoti  Bima  Yojana,  Pradhan  Mantri  Jan  Dhan  Yojana, Pradhan Mantri Vaya Vandan Yojana, etc are exempt from GST.

Furthermore,  all  the  fully  government  sponsored  insurance  schemes,  such  as  Ayushman Bharat PM-JAY, are also exempt from GST.

In  pre-GST  (service  tax)  period  also,  health  and  life  insurance  services  were  taxed  at  the standard rate and similar exemptions were given for specific health and term life insurance schemes catering to the needs of economically weaker sections of society.

As  mentioned  above,  medicines  are  levied  to  concessional  rates  of  GST  at  5%  or  12%. Specified medicines, which generally include lifesaving and other critical medicines attract lower GST of 5%.

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