Finance Minister Nirmala Sitharaman stated on Monday that the cost of health and life insurance policies for policyholders is likely to decrease if the GST Council recommends a reduction in the GST rate on these policies. In a written response in the Lok Sabha, she informed that during its meeting on September 9, the GST Council decided to form a Group of Ministers (GoM) to thoroughly examine the issues related to the GST on life and health insurance.
The matter of review of GST rates on life and health insurance is pending before the GoM. If a recommendation for a reduction in GST rate is made by the GST Council, the cost of insurance to the policy holder is expected to come down on account of reduction in GST, she said.
In response to a question about whether a reduction in GST on health insurance would contribute to making healthcare more equitable, Finance Minister Nirmala Sitharaman stated that the move is expected to lower insurance costs. Addressing concerns about whether insurance companies would pass on the benefits of any GST reduction to consumers or retain them through higher premiums, she said that competitive pricing in the market would help reduce the overall cost of insurance.
"As the GST rates are applicable over and above the insurance premium, if the GST rate is reduced, it is expected to benefit the policyholder directly especially in a competitive market with many insurers as the cost of insurance will reduce to that extent," she said.