GST on Health and Life Insurance Has Generated ₹21,000 Crore in last Three Years

 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.

For those navigating the complexities of GST and taxation or seeking legal advice on related matters, Vakilsearch Legal Services provides expert guidance and support. Whether you are a business or an individual affected by tax policies, Vakilsearch can help you manage and resolve these issues effectively, ensuring that your interests are protected in the evolving regulatory landscape.

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Akash G Varadaraj

Content Writer at Vakilsearch

I'm Akash. G. Varadaraj, an official content writer at Vakilsearch with over four years of experience. I'm here to simplify complex legal concepts into easily accessible articles that even a layman can understand. As a regular contributor to this news portal, I aim to keep you informed in the dynamic world of law, compliance, taxation, and much more. I ensure that you get to know our Vakilsearch expert's take on every piece of news, how it can help, and what you should do.

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