Indian insurance industry leaders have called for removing the goods and services tax (GST) on insurance premium. Speaking with Asia Insurance Review, Canara HSBC Life Insurance MD and CEO Anuj Mathur said, "Affordability is key to making insurance accessible to all. Revisiting GST rates on life insurance premiums could enhance affordability, especially for lower and middle-income groups.
“A reduction in GST would ease the financial burden, encourage wider adoption, and align with IRDAI’s vision of financial protection for every Indian. This move would reaffirm the government’s commitment to social security and financial resilience nationwide."
Bajaj Allianz Life Insurance MD and CEO Tarun Chugh told Asia Insurance Review that India's economic growth presents immense opportunities for the insurance sector to enhance financial resilience. Anticipated income tax cuts in the upcoming budget could boost disposable income, driving higher life insurance penetration.
Mr Chugh said, “With the elderly population (50+) projected to grow by 22% in the next six years, incentivising pension products is imperative. Aligning tax deduction of life insurance annuity products with the National Pension Scheme (NPS) and addressing the issue of tax on principal component on annuity products can evolve retirement needs effectively.”
Ageas Federal Life Insurance MD and CEO Jude Gomes said, “Revising the GST on term life insurance policies will reduce the cost of essential protection plans. A ‘zero rating’ for schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana (Prime Minister Life Assurance Scheme), smaller policies (up to $2300) and annuity products for NPS subscribers will expand access to insurance, ensuring inclusivity and sustaining growth.”
Tata AIA Life Insurance director on the board and ex-member of IRDAI Nilesh Sathe has said the goods and services tax on insurance premiums should be removed since insurance is a necessity, and this would make insurance more affordable and cheaper for people, potentially leading to increased penetration in the market.
Mr Sathe said, “Currently, GST on insurance has increased from 6% to 18%, however, this should not be seen merely as a revenue source for the government”
Star Heath and Allied Insurance MD and CEO Anand Roy said, “Currently, an 18% GST is levied on health insurance premiums, significantly impacting affordability, especially for low- and middle-income families. Reducing this GST rate would make health insurance more accessible to these groups. Retaining the benefit of Input Tax Credit deductions for insurers could also help keep premiums competitive, aiding industry growth and advancing the government’s healthcare objectives.”
Source: asiainsurancereview.com
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