18% GST on Term & Health Insurance is too heightened! Know how a lower GST rate will help the health sector…

The health and insurance sectors have been demanding high during the recent pandemic after and before. The experts believe that removal of GST or lowering the rates must be brought to the table…



There was a sudden rise in the pandemic we saw in recent times and how rapidly the demand for the health sector increased. It is found that the levied rates of GST on health insurance are 18% which is too high “experts statement”. The same must be reduced so that it becomes feasible for every individual to avail of the term and health insurance.

 

Health insurance is very essential for medical security seeing the pandemic waves. But in the country, not most people prefer to avail the health insurance due to the high GST rate of 18% and premiums. A report shows that 75 per cent of individuals bear costs for medical protection in the country from their pocket”. Here we all can get the loopholes in the medical sector which discourage people to avail of term insurance.

 

In the previous year, the Confederation of General Insurance Agents’ Associations of India, an umbrella body of non-life insurance agents, urged the government of India to construct at least a differentiation line between policies on commercial lines (availed by industry, commerce) and policies for personal individuals. The premium disbursed on policies to industry and commerce gets the ITC (input tax credit). But for individuals who avail of health, personal accident, and household security (fire, theft etc) policies, the premium paid and the high rate of GST at 18% is an expense that exhausts limited income.

 

The premium paid for policies (industry and commerce) gets the ITC. But a person is required to pay the premium along with the GST at 18% for the health, personal accident, and household security policies.

 

Let’s take an example - So, if your annual premium for a term plan is Rs. 10,000, then you are paying Rs. 1800 as the GST. If you have added something such as an accidental death benefit (for additional payout in case of death due to an accident), then you will need to pay GST of 18% on the additional premium charged for the individual.

 

This makes the people say no to the policies for medical security.  In recent days, the fitment committee, a panel of central and state government officials working for the GST Council, declined an offer to reduce the tax rate on premiums paid on the numerous insurance policies from life to health to third parties.

 

In the previous 2 years, it is found that a large number of insurers look for health insurance for making financial security strong due to the rapid rise in the pandemic. 



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