Stocks of Star Health, ICICI Lombard, and New India Assurance Company Limited (NIACL) are expected to be in focus today as the Goods and Services Tax (GST) Council meets to discuss potential reductions in the GST rate on health insurance policies.
Key discussion points
The GST Council is considering several proposals regarding the current 18% tax rate on health and life insurance premiums. Among the options on the table are:
- Full Exemption: A complete exemption from GST for health insurance premiums, which could result in a substantial revenue loss of approximately ₹3,500 crore.
- Reduced Rate: A proposal to lower the GST rate to 5% without the benefit of input tax credit (ITC), which might lead to a revenue impact of around ₹1,750 crore.
- Senior Citizen Relief: Exempting premiums for senior citizens or those with coverage up to ₹5 lakh, potentially costing the government ₹2,100 crore.
These discussions arise from concerns that high GST rates on insurance products are hindering access to necessary coverage, particularly in a country with low insurance penetration.