A reduction in the Goods and Services Tax (GST) rate on health insurance premiums from 18% to 5% is on the table for discussion. Several BJP-ruled states, including Gujarat, have expressed their support for this move, aiming to provide relief to senior citizens and families facing financial burdens during medical emergencies.

While consensus among all states has not been reached yet, a final decision is expected to be made in the upcoming GST Council meeting on September 9. 

The current 18% GST rate has been a deterrent for many, particularly senior citizens, to purchase health insurance. Reducing the rate is expected to encourage more people to avail of this crucial financial safety net.

However, BJP-ruled states, including Gujarat, have raised concerns about potential revenue losses due to the GST reduction. They have urged the central government to ensure that their revenue streams remain unaffected. 

GST officials from both the central and state governments are actively working to address these concerns and find a mutually agreeable solution.

Union Transport Minister Nitin Gadkari has also voiced his support for this measure.

Prior to the implementation of GST in July 2017, health insurance premiums were subject to a 15% service tax. GST increased this rate to 18%. 

The GST Council’s Fitment Committee has repeatedly recommended reducing the GST rate on health insurance premiums. This issue was also discussed during the 37th meeting of the GST Council. Both the Insurance Regulatory and Development Authority (IRDA) and the Financial Services Department have endorsed reducing the GST rate to 5%.

If approved, the reduction in GST on health insurance premiums would be a significant step towards making healthcare more affordable for Indian citizens.

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