New Delhi, Sep 8 || The GST rationalisation on life and health insurance premiums will significantly improve affordability, strengthen penetration and provide a boost to consumption ahead of the festive season, experts said on Monday.
The move comes as part of the broader GST rationalisation, which merged the 12 per cent slab with 5 per cent and subsumed the 28 per cent into 18 per cent.
Health and life insurance, which earlier attracted 18 per cent GST, have now been moved to the nil tax category.
According to ICRA, while policyholders will benefit from lower premiums, insurers may face a short-term hit as input tax credit (ITC) will no longer be available.
This could flatten margins, particularly in life insurance, though affordability gains are expected to drive higher sales and improve long-term penetration.
In general insurance, the retail health segment which accounted for 16 per cent of the industry’s gross direct premium income (GDPI) in FY25, will see premiums come down, though profitability of standalone health insurers may be under pressure if the full benefit is passed on.