Goods and Services Tax (GST) applies differently to health and life insurance policies in India. For health insurance policies, the GST rate is 18%. This applies to premiums paid for policies that cover medical expenses, hospitalization, and related health services. The GST on health insurance aims to streamline tax regulations and ensure uniformity in the insurance sector.
Source:- news 18
On the other hand, life insurance policies are subject to a different GST treatment. The rate for life insurance is 12% GST. This rate applies to premiums paid for life insurance policies that provide coverage against the risk of death, disability, or survival benefits. It is essential to note that the GST on life insurance policies is applicable only to the premium portion of the policy and not on the sum assured or the maturity benefits.
Source:- BBC news
For both types of insurance policies, GST is added to the premium amount, increasing the overall cost of the insurance. However, the tax is usually included in the premium amount that policyholders pay, and insurance companies are responsible for collecting and remitting this tax to the government.
It’s important for policyholders to be aware of these rates as they impact the cost of insurance. Additionally, tax benefits available under sections like 80D (for health insurance) and 80C (for life insurance) can still be claimed, but these do not affect the GST applicability. Understanding the GST rates helps in better financial planning and ensures transparency in the insurance process.
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