GST Reforms: A Diwali Gift for Policyholders
The Indian government plans to exempt GST on individual life and health insurance policies, reducing it from the current 18 per cent to nil. This reform is a key part of the broader 'next-gen' GST reforms that aim to simplify the tax structure and boost economic growth.
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The Indian government is preparing to exempt Goods and Services Tax (GST) on individual life and health insurance policies. Currently, such policies incur an 18 per cent GST, but this could soon be reduced to nil, should states accept the Centre's proposal, a decision anticipated in the upcoming GST Council meeting.
The Union Finance Minister Nirmala Sitharaman has emphasized that this initiative is part of broader GST reforms intended to streamline the tax system and pivot India towards self-reliance. The proposed reforms also include adjustments to tax rates on various goods, aiming to foster economic growth and consumer spending.
The potential revenue loss from GST relief on insurance is estimated at Rs 9,700 crore annually. However, it is expected to provide significant economic benefits, with an anticipated consumption boost of Rs 1.98 lakh crore, according to an SBI Research Report. The Centre and its finance counterparts continue negotiating to ensure this benefit reaches policyholders efficiently.
(With inputs from agencies.)
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