The government has proposed removing Goods and Services Tax (GST) on individual life and health insurance policies, a move that could ease costs for millions of policyholders.
Bihar Deputy Chief Minister Samrat Choudhary, who heads the Group of Ministers (GoM) on health and insurance, said on Wednesday (August 20) that the Centre’s view is clear insurance bought by individuals should be exempt from GST.
This has been discussed, and the GoM report will soon be placed before the GST Council, he said, adding that most states support the idea, though some have shared different suggestions. The final decision will rest with the GST Council.
Telangana Deputy CM Mallu Bhatti Vikramarka, also part of the GoM, stressed that the benefit of any tax relief must directly reach policyholders, not insurance companies. He also noted that such an exemption could result in an annual revenue loss of about ₹9,700 crore.
The 13-member panel, which was set up last September with ministers from states including UP, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana, is expected to submit its report by October.
Tax experts have welcomed the proposal, calling it a progressive step. Saurabh Agarwal, Tax Partner at EY India, said the move reflects how GST is being used not just to generate revenue but also to achieve larger policy goals.
Exempting GST on health and life insurance could encourage financial inclusion, strengthen healthcare access, and support initiatives like Ayushman Bharat. For individuals, particularly senior citizens and low-income families, it would make insurance more affordable, he said.
