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Indian Government Presses Insurers to Pass on GST Benefits Fully to Policyholders

Strategic Insights

— 1 min read

The Indian government is prioritizing ensuring that the benefits of the scrapped 18% Goods and Services Tax (GST) on individual health and life insurance policies are fully passed on to policyholders, not just partially as insurers had initially planned. Insurers, however, may revise their rates next year to factor in the input tax credit impact, according to an industry expert. The Department of Financial Services Secretary M.Nagaraju emphasized the importance of ensuring that the tax reduction benefits are fully passed on to both existing and prospective policyholders, and directed insurance companies to undertake outreach campaigns to publicize the reforms.

Key Takeaways:

  • The Indian government aims to ensure that the benefits of the scrapped 18% GST on individual health and life insurance policies are fully passed on to policyholders.
  • Insurers may revise their rates next year to factor in the input tax credit impact, according to an industry expert.
  • The Department of Financial Services Secretary M.Nagaraju emphasized the importance of ensuring that the tax reduction benefits are fully passed on to both existing and prospective policyholders.
  • Insurance companies have been directed to undertake outreach campaigns to publicize the reforms and highlight their prospective positive impact in making insurance more affordable and accessible for the common man.
  • The New India Assurance Company Ltd will pass on the GST benefit in full to policyholders.
  • IRDAI Chairman Ajay Seth is expected to meet with heads of insurance companies to discuss the GST passing on and input tax credit.

Statistics:

  • The GST collection on health and life insurance was Rs.16,398 crore for FY24.
  • The total health insurance premium booked by general insurers was around Rs.1.10 lakh crore last fiscal.
  • The GST on that was about Rs.20,000 crore.
  • The insurers will not have the luxury of huge float cash for investments due to the scrapped GST contribution.

Sources:

  • "Indian government underlines GST relief would be passed on to policyholders" by United News of India (UNI) on September 16.

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