In response to increasing calls for a reduction or elimination of GST on health and life insurance, the government informed Parliament on Monday that this levy generated ₹21,256 crore over the past three financial years, with ₹8,263 crore collected in 2023-24 alone.
Junior Finance Minister Pankaj Chaudhary, addressing a parliamentary query, noted that an additional ₹3,274 crore was collected from GST on reissued health policies over the same period. The GST Council had set an 18% rate when the new tax regime started in July 2017, with the Centre collecting 9% and states collecting the other 9%. Of the Centre’s share, 41% is distributed to the states according to the devolution formula.
In response to inquiries about industry requests for a reduction or removal of service tax, Chaudhary stated that there have been representations seeking exemptions or lower GST rates on life and health insurance. GST rates and exemptions are determined by the GST Council, which includes representatives from both the Centre and the States/UTs.
The minister also mentioned that certain insurance schemes, such as Rashtriya Swasthya Bima Yojana, Universal Health Insurance Scheme, Jan Arogya Bima Policy, and Niramaya Health Insurance Scheme, are exempt from GST.
Following Nitin Gadkari’s suggestion to eliminate GST on health and life insurance products, there has been increasing support for this cause, with West Bengal leaders joining the call for its removal. TMC MP Derek O’Brien specifically requested a reduction in the GST rate, arguing that the current 18% levy is burdensome, particularly for the middle class.
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