Life Insurance to get Cheaper for Indians as GoM nods Rate cuts, GST Council Approval last hurdle
At present, life insurance premiums in India attract an 18% GST charge
In a move that could bring significant relief to policyholders, the Group of Ministers ( GoM ) appointed by the central government has given its nod to reduce the Goods and Services Tax ( GST ) rate on life insurance premiums. The proposal now awaits final approval from the GST Council, scheduled to meet next week, and industry insiders say the new rates may come into effect as early as...
In a move that could bring significant relief to policyholders, the Group of Ministers ( GoM ) appointed by the central government has given its nod to reduce the Goods and Services Tax ( GST ) rate on life insurance premiums. The proposal now awaits final approval from the GST Council, scheduled to meet next week, and industry insiders say the new rates may come into effect as early as the following month if cleared.
At present, life insurance premiums in India attract an 18% GST charge. Under the proposed changes, this rate may drop to as low as 12% or even lower, depending on the Council’s final decision. The GoM’s recommendation stems from rising concerns that high taxation on financial protection discourages middle-income households from opting for adequate life coverage. With family incomes squeezed amid economic uncertainties, policymakers believe cheaper insurance is crucial for broader financial inclusion and social security.
While insurers have welcomed the move, many are waiting to see the exact quantum of reduction before revising their premium structures. “The intent is positive, and if the GST Council approves this, we would certainly adjust our pricing to pass on the benefits to customers,” said an executive at a leading life insurance firm. “A reduction in GST could boost policy sales, and ultimately encourage more individuals to secure their families’ future.”
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Consumer advocates too have expressed optimism. “Insurance is not a luxury—it’s a necessity,” said a consumer rights spokesperson. “Lower taxes will help more people enter the insurance fold, thereby safeguarding their loved ones against financial hardship.”
With the GST Council’s meeting on the horizon, all eyes are on the final seal of approval. Industry watchers say this decision could herald a new wave of product innovation and marketing strategies among insurers, as lower rates could spur demand and spark competition.
If the Council greenlights the proposal, experts expect an uptick in policy subscriptions and long-term growth in insurance penetration, ultimately strengthening India’s socio-medical security framework.
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