Lok Sabha Question No. 111 (UNSTARRED), answered on 2024-11-25
Subject: GST Exemption on Health and Life Insurance Policies
Ministry: FINANCE
Asked by: Shri N K Premachandran

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

## GST EXEMPTION ON HEALTH AND LIFE INSURANCE POLICIES

## 111. SHRI N K PREMACHANDRAN:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government proposes to exempt GST on health insurance and life insurance policies, if so, the details thereof and the action taken thereon;

(b)  whether  the  State  Governments  have  supported  the  proposal  for  exempting  GST  on  health insurance  and  life  insurance  policies,  if  so,  the  details  thereof  along  with  the  name  of  State Governments;

(c)  whether  the  Government  proposes  to  establish  a  monitoring  system  to  ensure  that  insurance companies disburse the claims as per the terms and conditions of the policy within the stipulated time, if so, the details thereof and the action taken thereon; and

(d) whether the Government proposes to establish a system for providing health insurance to all by reducing the premium on health policies, if so, the details thereof and the action taken thereon?

## ANSWER

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

(a)  &  (b): 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.

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.

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 PMJAY, are also exempt from GST.

The issue of exempting/reducing the 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. The recommendations of the GoM when received will be placed before the GST Council.

(c) & (d): Insurance Regulatory and Development Authority of India (IRDAI) has been established vide IRDAI  Act,  1999  to, inter-alia ,  protect  the  interests  of  holders  of  insurance  policies.  Further, IRDAI (Protection of Policyholders' Interests, Operations and Allied Matters of Insurers) Regulations,  2024,  inter-alia,  states  that  insurers  shall  have  in  place,  systems  and  processes  for expeditious settlement of claims and ensure that claims registered are settled in a timely manner not exceeding the turnaround times for settlement of claims as per their Board approved policy and in the manner as may be specified. IRDAI has mandated that the Grievance Redressal Procedure shall be followed  scrupulously  by  all  insurers  and  distribution  channels.  The  insurers  are  mandated  to publicize their grievance redressal procedure and ensure its availability on their website.

Additionally, the Insurance Ombudsman  System  has been established under the Insurance Ombudsman  Rules,  2017.  It  offers  a  quick  and  cost-effective  way  for  policyholders  to  resolve grievances  including  claim  settlement  with  insurance  companies  and  intermediaries  through  its  17 offices. The Ombudsman must resolve the issue within 90 days, and its decision is binding on insurers and intermediaries. However, the policyholder/complainant is free to exercise further available legal remedies, if not satisfied.

Centralized Public Grievance Redressal and Monitoring System (CPGRAMS) is monitored directly by the Department of Administrative Reforms & Public Grievances, Government of India. It is an online portal available to citizens to lodge their complaints to the public authorities on any subject related  to  service  delivery  including  claim  settlement.  It  is  a  single  portal  connected  to  all  the Ministries/Departments of Government of India and States.

Further,  Ayushman  Bharat,  a  flagship  scheme  of  Government  of  India,  was  launched  in  2018  to achieve the vision of Universal Health Coverage (UHC). It provides health cover of Rs 5 lakh per family  per  year  for  secondary  and  tertiary  care  hospitalization  to  vulnerable  families.  Taking  the mission  ahead,  the  Union  Cabinet  in  September  2024  has  approved  health  coverage  to  all  senior citizens aged 70 and above, regardless of their income.  This expansion aims to benefit around 4.5 crore  families,  including  6  crore  senior  citizens,  by  providing  them  with  free  health  insurance coverage of up to Rs 5 lakh per family. On 29.10.2024, Ayushman Vaya Vandana Cards were rolled out and as on 21.11.2024, 10 lac senior citizens have been enrolled, out of which 4 lacs are women and a sum of Rs. 9 Crore has been authorized towards treatment of senior citizens.

Further,  IRDAI  envisages  that  every  citizen  has  an  appropriate life,  health  and  property  insurance cover and every enterprise is supported by appropriate insurance solutions by 2047. As part of this plan, IRDAI has created State Insurance Plans wherein states and union territories are allotted to one life,  one  general  and  one  health  insurer  and  the  lead  insurers  are  required  to  promote  adoption  of insurance.

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