By Admin 
GST on Health Insurance Premium: In the 56th meeting of GST Council, 18 percent GST on the premium of health and life insurance policy has been removed. That is, no GST will be imposed on health and life insurance now. It was being demanded for a long time. This hoped people that it would be cheaper to take insurance by removing 18 percent GST on premium.
However, a recent new report has destroyed this expectation of the people. In a new report by Kotak Institutional Equities Research, it has been reported that insurance companies are thinking of increasing their tariff to 5 percent to compensate for the loss due to input tax credit. This can increase the premium rather than decreasing.
Companies will balance increased expenses
It has been said in the report that increasing the tariff will help companies compensate for the loss of input tax credit. Let us know that earlier insurance companies used to take advantage of the input tax credit (ITC) on their operational costs on commission, reintegration and advertisements of agents. Now due to the removal of GST, companies will not be able to claim ITC. This will increase their expenses, which they will have to resort to tariffs to balance. That is, the policy rates will be increased.
Let us tell you that in GST system, insurance companies are given a special facility. Under this, the tax paid on the expenditure on operation, it could have been reduced from GST taken from customers. After this, the government had to deposit the tax left. That is, due to ITC, companies did not have much tax burden, but if there is no GST, then how will the balance be accounted for. To balance this, companies can increase the premium rates so that they are reduced or not.
Demand will increase the policy of policy
However, the report also states that its demand will increase due to the insurance premium 12-15 percent with the GST rate cut. However, what will be the benefit of relief in GST due to increasing premium! The discount on insurance premium is scheduled to come into force from September 22, 2025.
According to the report of Kotak Institutional Equity, Star Health can increase its tariff by 1-3 percent after the exemption on GST and ITC benefits are over. On the other hand, Niva Bupa can increase it up to about 4 percent. In this way, the impact of the GST rate cut on the insurance policy will be found to be negligible to the policyholders.
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