GST Waiver on Life and Health Insurance Premiums for Senior Citizens: Key Changes Proposed

The GST Council is deliberating on the issue of term life insurance premium and health insurance premium exemption on tax for senior citizens. The concept behind this proposed exempting of such GST is to make the taxes of the vulnerable people better and enhance the percentage of people securing their coverage percentage.

It was proposed in the last meeting to the ministerial panel that health insurance premium up to ₹5 lakhs in any given financial year should be exempt from GST for every individual except senior citizens. Any premium above ₹5 lakh will continue to attract an 18% GST. As of now, life insurance premiums, term policy and family floater policies attract the same rate of GST.

West Bengal Chief Minister Mamata Banerjee reacted saying on X (formerly Twitter) that continued agitation is pressurizing the central government to reduce the 18% GST on health and life insurance products. She said, with a focus on the probability of high GST rates resulting in the inability of poor people to sustain their insurance products.

Reports have it that the ministerial panel to which Bihar Deputy Chief Minister Samrat Chaudhary is chairman is working on resolving issues which affect the people at large, specially the geriatric. Apart from these two relief measures in GST, the panel also proposed raising the tax rate for other items of consumers goods including raising the GST on items priced above ₹15,000 on shoes and those above ₹25,000 on wristwatches to 28% from 18%.

The recommendations are likely to bring in an estimated revenue of ₹22,000 crore if approved by the GST Council and save money on GST levies for commodities like packaged drinking water and bicycles.