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Reduction in GST on health and life insurance could act as catalyst for business growth

ICICIdirect Research 16 Aug 2024 DISCLAIMER
  • Demand for reduction in GST rate on health and life insurance is gaining strength in both political and industry circles. Currently, all health and life insurance policies attract 18% GST. However, prior to implementation of GST, insurance premium attracted service tax at 15%.
  • While decision of GST council is to be seen for any reduction in taxes levied on insurance premium, however, given government’s focus on improving insurance penetration and support across cohorts of stakeholders, probability of a decline in GST remains high.
  • Any reduction in GST on premium, if announced, will provide breather to the consumers through lower premium rates. For the industry, it remains beneficial as passing on the benefit of reduction in GST rates is expected to bolster customer accretion and/ or sum assured and thus aid business growth.
  • While lower taxation will benefit all players, in listed space, Star Health remains relatively better beneficiaries as it is a standalone insurer primarily engaged in individual health insurance business.
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