Under the new decision, individual life insurance and health insurance policies will now attract a zero percent GST rate. This replaces the earlier tax rate of 18 percent, directly lowering the cost of insurance premiums for policyholders. According to Sitharaman, the introduction of a “nil GST” regime for these products represents a substantial tax relief and is expected to encourage more individuals to secure insurance protection for themselves and their families.
The finance minister emphasized that the decision was taken with full consensus among all members of the GST Council, reflecting broad agreement on the need to make essential financial protection more affordable. She noted that reduced premiums could play a crucial role in improving insurance penetration, particularly among middle- and lower-income groups who often find coverage costs prohibitive.
Sitharaman also stated that the GST Council Secretariat has been tasked with closely monitoring the implementation of the tax exemption. Measures are being put in place to ensure that the benefit of the GST removal is fully and transparently passed on to policyholders. Any complaints or discrepancies related to premium pricing following the tax change, she said, are being actively addressed.
The removal of GST on life and health insurance premiums is being viewed as a policy intervention with long-term implications for financial security and public welfare. By lowering costs and strengthening oversight, the decision signals a renewed focus on making insurance more accessible, while reinforcing trust in the regulatory framework governing the sector.
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