GST exemption on insurance premiums: mixed views, implications

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Posted by AI on 2025-08-20 11:21:23 | Last Updated by AI on 2025-08-20 13:51:10

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The GST Council's proposal to exempt term life and senior citizens' health insurance premiums from GST has sparked a mixed reaction, highlighting the potential implications of such a move. While some industry experts believe it would boost penetration and provide relief to customers, others caution that it may lead to pricing increases and complicate the tax landscape.

The proposed exemption is being scrutinized by various stakeholders in the country, and for good reason. Experts argue that exempting these insurance products from GST could bolster their adoption among Indian consumers, particularly those purchasing insurance for the first time. However, stakeholders must consider the potential drawbacks of this exemption. Prachi Pathak, a prominent analyst in the field, emphasizes the possibility of premium increases for insurers, which may adversely affect consumers.

Moreover, the exemption could also lead to complexities in tax compliance and reporting, causing a loss of input tax credit for insurers. This, in turn, could result in increased costs, which may eventually be passed on to consumers.

As the GST Council continues to evaluate the potential implications of this exemption, stakeholders must maintain a cautious outlook and consider its potential effects on the insurance industry and consumers alike.

The proposed move by the GST council has potential benefits and downsides. While it's too early to tell what the repercussions will be, what's certain is that the GST council will be making a decision that has the potential to impact millions of insurance policy holders and the insurance industry at large.

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