Finance Ministry Clarifies GST Exemption On Health And Life Insurance Policies

While certain government-backed health and life insurance schemes are exempt from GST, there is currently no proposal to extend the exemption to all health and life insurance policies, the Minister of State for Finance, Pankaj Chaudhary, said in response to a question raised in the Parliament's winter session on Monday.

Chaudhary said health insurance schemes targeting economically disadvantaged sections, such as the Rashtriya Swasthya Bima Yojana and Ayushman Bharat PM-JAY, along with life insurance services under schemes like the Pradhan Mantri Jeevan Jyoti Bima Yojana, are already exempt from GST. These exemptions also extend to fully government-sponsored programmes, aimed at providing insurance to the vulnerable sections of society.

The issue of extending GST exemptions to more health and life insurance products was discussed at the 54th GST Council meeting held in September. Following these discussions, a Group of Ministers under Bihar deputy CM, Samrat Chaudhary, was formed to evaluate the broader implications of GST on these sectors. The GoM’s recommendations will be reviewed by the GST Council, once submitted.

"The first meeting of the GoM was held on October 19, 2024, in New Delhi where the issues of GST on health and life insurance policies were discussed. The recommendations of the GoM, when received, will be placed before the GST Council," the response stated.

The Insurance Regulatory and Development Authority of India has established guidelines requiring insurers to resolve claims promptly, the minister pointed out.

IRDAI has also put in place a grievance redressal procedure, supported by the insurance ombudsman system, to help policyholders resolve disputes. Furthermore, the government has launched the Ayushman Bharat scheme to provide health coverage to vulnerable families, which was further expanded in 2024 to cover senior citizens.