GST reform implementation: Big boost to health insurance subscribers

The Goods and Services Tax (GST) reforms will take effect on September 22. The GST Council has decided to eliminate the 12 per cent and 28 per cent GST slabs and place the items in these categories in the lower 5 per cent and 18 per cent slabs. The move has been taken to put more disposable income into the hands of the masses to boost domestic consumption. One of the most important sectors that will benefit from the GST reforms is the insurance sector. Here's why.

How will Goods and Services Tax

The central government will remove the 18 per cent GST from health insurance premiums. This ensures that insurance premiums will go down, helping millions of families. This means that the premium burden will likely go down by 18 per cent.

All individual health insurance, including family floater plans, senior citizens' policies, and individual covers, will be exempt from GST.

By eliminating GST on premiums, families can now save significantly, making it easier to invest in comprehensive coverage for themselves and their loved ones.

Meanwhile, the insurance regulator asked insurers to pass on the benefits of the removal of the GST to customers, reported ET on Wednesday.

In a meeting with the industry on Wednesday, Insurance Regulatory and Development Authority of India (IRDAI) chairperson Ajay Seth said that the exemption is a great step towards achieving universal coverage by 2047.

He said it was the industry's turn to step up to significantly improve affordability, accessibility, and availability of insurance products.

The insurance industry had been asking for the government to clarify GST input tax credits.

Without the tax credit, the industry will take the hit for the GST rationalisation.