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Major Relief on the Horizon? GoM Proposes GST Exemption for Health and Life Insurance

  • Nishadil
  • August 21, 2025
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  • 2 minutes read
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Major Relief on the Horizon? GoM Proposes GST Exemption for Health and Life Insurance

In a significant move that could bring substantial financial relief to millions, a high-level Group of Ministers (GoM) on GST rate rationalisation has formally proposed a complete exemption from Goods and Services Tax (GST) for both health and life insurance products. This progressive recommendation, spearheaded by Bihar Deputy Chief Minister and GoM convenor Samrat Choudhary, is aimed squarely at enhancing the accessibility and affordability of crucial insurance coverage for the common citizen.

The proposal comes at a crucial time when escalating medical inflation is a growing concern for households across the nation.

By eliminating the current 18% GST levied on insurance premiums, the GoM seeks to drastically reduce the cost barrier, thereby encouraging more individuals to secure vital protection against unforeseen health crises and life uncertainties. This is seen as a direct measure to boost insurance penetration, especially among the middle and lower-income groups who often find premium costs prohibitive.

Deputy CM Choudhary emphasized the GoM's commitment to making insurance a more viable option for everyone.

The comprehensive report detailing this and other recommendations will soon be presented to the overarching GST Council for its meticulous consideration and final decision. The council's approval would pave the way for a policy change that could profoundly impact public welfare.

The GoM itself was constituted with a broad mandate: to simplify the intricate GST rate structure, remove anomalies, and explore the possibility of a revenue-neutral rate that would benefit both consumers and the exchequer.

This particular proposal for insurance GST exemption aligns perfectly with the objective of easing the financial burden on citizens for essential services.

Interestingly, the call for reduced or exempted GST on insurance is not new. Several states, including Odisha, Kerala, and Goa, have previously voiced similar appeals, underscoring a widespread recognition of the need for such relief.

This collective push from various states adds significant weight to the GoM's current proposal.

Beyond insurance, the GoM is also deliberating on other key exemptions. One notable consideration is the GST exemption for services provided by Resident Welfare Associations (RWAs) for monthly charges below Rs 7,500.

This multi-faceted approach by the GoM signals a broader effort to rationalize GST rates where they impact the common person most directly.

If approved by the GST Council, this exemption on health and life insurance could mark a pivotal moment, making these vital financial instruments more affordable and accessible, ultimately fortifying the financial resilience and well-being of Indian families.

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