Millions of Indians will have easier access to and affordability of healthcare protection thanks to the GST Council’s historic decision to place health insurance within the NIL GST category.
GST Exemption Boosts Insurance
By exempting health and life insurance premiums from the GST levy, the GST Council created history. The action aims to increase penetration in India’s underinsured market and lower the cost of insurance products.
Leaders in the industry have praised the ruling. Dr. Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, said, “The GST Council’s decision to include health insurance within the NIL GST band is a historic step that would make healthcare protection more accessible and affordable for millions of Indians.”
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Mixed Impact on Premiums
BimaPay Finsure’s CEO and co-founder, Hanut Mehta, concurred. “As a premium finance provider, we see two sides to this move. Due to the removal of the tax component, the amount of each customer’s financing ticket will decrease in the near future. On the plus side, however, reduced entry costs will encourage more individuals to get insurance, particularly those who are first-time buyers. There is a greater client base and a broader use of premium finance there, which is where the real potential lies. Price reductions also allow individuals to think about bigger sums covered,” Mehta added.
The effect on premiums, however, may not be as clear-cut as it seems. Experts warned that the real benefit to policyholders could not be proportionate unless insurers are permitted to keep input tax credits (ITC). In order to control costs, insurers now claim 8–10% ITC on a variety of input services. The removal of the ITC and GST exemption might force pricing practices to account for these expenses. Customers may get less alleviation as a result of this.
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