The central government has made a significant step to boost the health insurance sector. The government aim to reduce the GST on health insurance on premium package. However, a deadlock persists on the input tax credit.
People are becoming more aware of health insurance after Covid pandemic and this move aims to boost insurance penetration.
Insurance companies are continuously demanding to reduce the GST on health insurance premiums. In this regard, the Government agrees to reduce the GST rate on health insurance from 18% to 5% without ITC. But insurance companies insist on ITC. Insurance companies are demanding that the GST of health insurance be reduced from 18% to 12% with ITC.
As per insurance companies, 18% GST is a big hindrance in health insurance sales and it is also putting a barrier in increasing the insurance penetration. Industry suggested, whatever loss it will incur due to GST cut will be compensated with increased premiums and high volume. Insurance companies also claim to introduce health insurance into 12% tax bracket with Input Tax credit.
Currently, 18% GST is imposed on life and health insurance. A high GST Rate is not supportive of boosting the insurance penetration. For the last few days, the demand for GST reduction on health insurance has been floating due to the low penetration of health coverage in India.
The insurance company has urged the governments to resolve the issue without any further hurdles.
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Source: Times Now News
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