Insurance Industry Seeks Lower GST On Distribution Costs
The government has clarified that premiums for individual life and health insurance policies will be exempt from the GST.
The insurance industry is in ongoing discussions with the government for lower Goods and Services Tax (GST) on commissions or distribution costs, sources told NDTV Profit. Acquisition cost remains a high expense for the industry. Additionally, given the government's thrust on "Insurance for All", the industry is of the belief that promoting sales of insurance policies by reducing distribution costs will also help deepen penetration.
The government has clarified that premiums for individual life and health insurance policies will be exempt from the GST. This change eliminates the 18% GST previously levied on these premiums, making essential insurance coverage more affordable for individuals and families. No input tax credit (ITC) is allowed for commissions, brokerage, admin services.
As such, the industry estimates an impact of about 6-7% on bottom lines of non-life insurance company on an average. While the impact is likely to be higher on companies with higher weightage of health insurance in their portfolio.
