This document summarizes the Indian government's response to a question in Lok Sabha regarding the impact of Goods and Services Tax (GST) on health insurance premiums. The government acknowledges awareness of the issue of high GST rates (18%) on health insurance policies. While certain schemes targeting economically weaker sections and the differently-abled are exempt, the broader issue of GST on health and life insurance was discussed at the 54th GST Council Meeting on September 9, 2024. The Council decided to form a Group of Ministers (GoM), under the convenorship of Sh. Samrat Choudhary, Hon'ble Deputy CM, Bihar, to comprehensively examine the matter. During the 55th GST Council meeting on December 21, 2024, the GoM requested more time to finalize its recommendations, which was granted by the Council. Therefore, the matter is currently under review by the GoM, and no decision has been made regarding abolishing or reducing the 18% GST on health insurance and term insurance. The GST rates and exemptions are determined based on the recommendations of the GST Council, a constitutional body with members from both the Union and State/UT Governments.
Key Entities Referenced
GST Council: A Constitutional body comprising of members from both the Union and State/UT Governments that recommends GST rates and exemptions on all services and goods.
Goods and Services Tax: A value-added tax levied on most goods and services sold for domestic consumption. In this context, it refers to the tax on health insurance policies.
Ministry of Finance: The ministry responsible for the finances of the Government of India, answering the question in the Lok Sabha.
Lok Sabha: The lower house of the Parliament of India, where the question regarding GST on health insurance was raised.
Ayushman Bharat Pradhan Mantri Jan Arogya Yojana: A health insurance scheme catering to the economically weaker sections of the society and differently abled, exempt from GST.
Rashtriya Swasthya Bima Yojana: A health insurance scheme catering to the economically weaker sections of the society and differently abled, exempt from GST.
Group of Ministers GoM on Life and Health Insurance: A committee constituted by the GST Council to holistically look into the issues pertaining to GST on life insurance and health insurance.
Bihar: The state in India where Sh. Samrat Choudhary, the Convenor of the Group of Ministers GoM on Life and Health Insurance, is the Hon'ble Deputy CM
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 2373
TO BE ANSWERED ON MONDAY, AUGUST 04, 2025/ SRAVANA 13,
1947(SAKA)
IMPACT OF GST ON HEALTH INSURANCE PREMIUM
2373. MR PATHAN YUSUF:
Will the Minister of FINANCE be pleased to state:
(a) whether the Government is aware of the impact of high GST rates on
health insurance policies;
(b) if so, whether the Government has any proposal to abolish or reduce
the 18 per cent GST on health insurance and term insurance; and
(c) if so, the details thereof and if not, the reasons therefor?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (c): GST rates and exemptions on all services and goods are
prescribed on the recommendations of the GST Council which is a
Constitutional body comprising of members from both the Union and
State/UT Governments. GST is leviable on health insurance policies at the
standard rate of 18%. However, certain health insurance schemes
catering to the economically weaker sections of the society and
differently abled, such as Ayushman Bharat Pradhan Mantri Jan Arogya
Yojana, Rashtriya Swasthya Bima Yojana , Universal Health Insurance
Scheme, Jan Arogya Bima Policy and Niramaya Health Insurance Scheme
are exempt from GST.
The issue of GST on health and life insurance was placed before the GST
Council in its 54th Meeting held on 9th September 2024 at New Delhi. After
detailed deliberations, the GST Council recommended to constitute a
Group of Ministers (GoM) to holistically look into the issues pertaining to
GST on life insurance and health insurance. Accordingly, a Group of
Ministers (GoM) on Life and Health Insurance was constituted under the
Convenorship of Sh. Samrat Choudhary, Hon'ble Deputy CM, Bihar.
During the 55th meeting of the GST Council held on 21st December 2024 in
Jaisalmer, the Convener of the Group of Ministers (GoM) on Life and
Health Insurance sought more time for finalizing the GoM’s
recommendations and placing the same before the GST Council. The
Council agreed to give more time to GoM to finalize its recommendations.
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