IRDAI Chief Advocates GST Removal on Insurance Premiums
IRDAI Chairman Debasish Panda has suggested the removal of Goods and Services Tax (GST) on health and life insurance premiums, highlighting the need for input tax credit mechanisms to ensure that policyholders benefit.
Speaking at the Global Insurance Summit in Mumbai, Panda emphasized that the removal of GST should align with input tax credits to make insurance policies more affordable for the masses.
Addressing Affordability in Insurance
The IRDAI chief stated that while reducing GST could lower premium costs, it is critical to implement input tax credits to ensure the savings are passed on to policyholders. “We have communicated to the Ministry of Finance that removing GST without input tax credit won’t serve the purpose of making insurance affordable,” Panda remarked.
Health and life insurance premiums are currently taxed at 18% GST, which significantly impacts affordability, especially for lower-income groups. Panda stressed the importance of reducing financial barriers to increase insurance penetration in the country.
Boosting Insurance Penetration
India’s insurance penetration is still below global standards, and Panda believes that easing GST norms could play a pivotal role in bridging this gap. He also highlighted the recent efforts by the insurance industry to streamline processes, adopt digital technologies, and design policies catering to varied demographics.
The call for GST reform comes at a time when the government is focusing on financial inclusion and making insurance accessible to all segments of the population. If implemented, this move could significantly enhance the affordability and reach of health and life insurance policies in India.
Panda’s comments reflect the insurance regulator’s commitment to fostering growth in the sector while addressing the concerns of policyholders and stakeholders.
