In a move that could bring significant financial relief to senior citizens, the Group of Ministers (GoM) is exploring a Goods and Services Tax (GST) exemption on health and life insurance premiums for policies up to ₹5 lakh. This proposal, discussed during a recent GoM meeting, aims to ease the financial burden on older policyholders who often face higher insurance premiums due to age and health conditions.

Led by Bihar Deputy Chief Minister Samrat Chaudhary, the GoM’s recommendation focuses on lowering insurance costs and ensuring broader healthcare access for senior citizens. The final decision will be taken by the GST Council, with the report expected to be submitted by the end of October 2024.

Proposal Details and Expected Benefits

Currently, health and life insurance premiums attract an 18% GST, including term life insurance and family floater policies. However, the GoM has proposed exempting policies under ₹5 lakh for senior citizens from this tax, a step toward making healthcare and insurance more affordable.

Speaking on the proposal, Chaudhary emphasized that “the goal is to provide relief to people, particularly senior citizens.” The exemption would ensure that older adults are not overburdened by high premium costs, facilitating better access to essential healthcare services.

Health insurance policies with coverage above ₹5 lakh would still attract the 18% GST, while the proposed exemption would apply exclusively to policies below that threshold, especially those purchased by senior citizens.

Industry Impact and Implications

The insurance sector is poised to experience significant changes if the GST Council approves the recommendation. Reducing the tax burden on insurance premiums would not only encourage more individuals to secure coverage but also promote preventive healthcare by making policies more accessible.

With senior citizens as the primary beneficiaries, the exemption would positively impact insurers’ premium structures, potentially driving higher demand for tailored health policies within this demographic.

Also Read: Sparsh Group of Hospitals Sets ₹550-Crore Expansion Plan into Motion with New Bengaluru Facilities and R&D Centre.

Next Steps: Awaiting the GST Council’s Decision

The GoM, comprising ministers from 13 states, including Uttar Pradesh, Tamil Nadu, West Bengal, and Karnataka, will submit its findings to the GST Council for final approval. “Every member is aligned in their intent to provide relief to the people. The council will make the final call after reviewing our report,” Chaudhary noted.

The decision is expected to be finalized soon after the submission, potentially reshaping insurance affordability for seniors across the country.

If implemented, this measure could set a precedent, encouraging more senior citizens to invest in comprehensive health coverage. Industry stakeholders will closely monitor the council’s decision as it could also drive changes in future policy structures and tax treatments.

This development highlights the government’s focus on financial inclusion within healthcare, demonstrating a commitment to ensuring that essential health services remain accessible for vulnerable sections of society, including senior citizens.

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