GST key to lowering health cost: FM

New Delhi : Finance Minister Nirmala Sitharaman on Monday said the cost of insurance to the policy holder is expected to come down if the GST Council recommends a reduction in GST rate on health and life insurance policies.

In a written reply in the Lok Sabha, she said the GST Council in its September 9 meeting had recommended to constitute a Group of Ministers (GoM) to holistically look into the issues pertaining to GST on life insurance and health insurance.

“The matter of review of GST rates on life and health insurance is pending before the GoM. If a recommendation for a reduction in GST rate is made by the GST Council, the cost of insurance to the policy holder is expected to come down on account of reduction in GST,” she said. Sitharaman said this while replying to the question on whether GST reduction on health insurance will be a step towards making healthcare more equitable. To a query on how the government will ensure that insurance companies pass on the benefits of any GST reduction to consumers, rather than retaining them through increased premiums, Sitharaman said competitive pricing would bring down the cost of insurance.

“As the GST rates are applicable over and above the insurance premium, if the GST rate is reduced, it is expected to benefit the policyholder directly especially in a competitive market with many insurers as the cost of insurance will reduce to that extent,” she said.

Currently, an 18 per cent GST is levied on premiums paid for life and health insurance policies.