Govt considering lower GST on LIC premium? Here’s what Finance Ministry says

The issue of GST (goods and services tax) on health and life insurance is expected to be taken up again when the all-powerful GST Council meets this month. The issue has been pending for resolution ever since it was placed last year at the Council’s 54th meeting in September.

Meanwhile, the government was again asked in the Lok Sabha about any possible plans to cut GST on LIC premiums or any decision the council might have taken in this regard.

Here’s what Finance Ministry replies lower GST rates on insurance

To this, Minister of State in the Ministry of Finance Pankaj Choudhary said that any decision on GST rates on any goods or services is taken based on the GST Council’s recommendations. The issue of GST on insurance has been under the consideration of a Group of Ministers (GoM) formed last year.

“GST rates and exemptions on all services and goods are prescribed on the recommendations of the GST Council… The issue of GST on health and life insurance was placed before the GST Council in its 54th Meeting held on 9th September 2024 at New Delhi,” the minister said.

After detailed deliberations, the minister further informed, the GST Council recommended to constitute a Group of Ministers (GoM) to holistically look into the issues pertaining to GST on life insurance and health insurance. “Accordingly, a Group of Ministers (GoM) on Life and Health Insurance was constituted under the Convenorship of Samrat Choudhary, Deputy CM, Bihar,” the MoS Finance informed Parliament.

“During the 55th meeting of the GST Council held on 21st December 2024 in Jaisalmer, the Convener of the Group of Ministers (GoM) on Life and Health Insurance sought more time for finalizing the GoM’s recommendations and placing the same before the GST Council. The

Council agreed to give more time to GoM to finalize its recommendations,” he said.

GST Council may announce some relief at its meeting this month

The GST Council meeting is likely to be held in the second half of this month. In the upcoming meeting, life and health insurance policyholders might likely see some relief. The GST Council might go for a reduction or complete scrapping of the GST on life and health insurance premiums.

The Group of Ministers (GoM) has also reportedly recommended the complete removal of GST on term life insurance and health policies of senior citizens. Apart from this, GST exemption has also been talked about in policies with health cover up to Rs 5 lakh, various reports suggest. Before taking a final decision on these recommendations, the opinion of the insurance regulatory body IRDAI was sought, which was submitted to the council in December 2024 itself.

The Answer can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/08/REDUCTION-OF-GST-ON-LIC-PREMIUM.pdf

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