Relief for policyholders: Will 18% GST on term life insurance premium be removed in the GST meeting on September 9, 2024?
ET Wealth Online. Removal of 18% GST on insurance premiums has been a longstanding demand of the various stakeholders of the insurance industry. Insurance customers also want the government to remove GST as the additional tax increases their financial burden. The debate over the 18% GST levied on life and health insurance premiums came to the forefront last month after various political leaders, including Union Minister of Road Transport and Highways Nitin Gadkari, urged Finance Minister Nirmala Sitharaman to rollback the tax. Will the central government finally remove 18% GST and bring down your life and health insurance premium? Read on to find out what experts are saying.
Will the GST Council remove 18% GST on term insurance premiums?
Harsh Bhuta, Partner, Bhuta Shah and Co. LLP says, «The GST Council is likely to address critical issues related to rate rationalisation, tax on TDR, the inverted duty structure, etc., in its upcoming meeting scheduled for September 9, 2024. One such issue expected to gain favor in the meeting is the removal of GST on premiums paid towards term life insurance.»
Why GST Council is likely to remove 18% GST on term insurance premiums
Term insurance policies are the most popular type of life insurance, offering only a death benefit without any maturity benefit. These are pure-risk products designed to provide substantial coverage at a relatively low cost. Adding GST to term insurance premiums ultimately leads to higher premium payments. Moreover, the insurance policyholders only get the benefit or their money back in case of unforeseen events such as deaths. Otherwise, they may not even benefit from buying term insurance plans. Shah adds, «The idea behind such policies is to provide
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