GCCI wants GST on health insurance reduced

Ahmedabad: Since the onset of the Covid-19 pandemic, health insurance coverage has become a huge cost component for companies. While industry is facing increases in costs, the Gujarat Chamber of Commerce and Industry (GCC) on Monday made a representation to the Union finance minister asking that the GST rate on health insurance be cut from 18% to 5%.

“Insurance penetration in India is low at 4.2% of gross domestic product (GDP), compared to the global average of 7%. It is expected that the government takes concrete steps to support higher insurance penetration in the Union Budget. A well-insured society leads to lesser support strain on government finances, thereby keeping its unplanned expenditure and budget planning process more stable,” the representation states.

According to industry players, the majority of medical, hospital, and consulting services are exempted from GST, whereas 18% GST is applicable on health insurance. There is a strong rationale for the government to encourage the use of insurance to protect citizens and remove or lower GST to say 5% on health insurance premiums.

“When the government is making efforts to promote health and well-being among citizens, taxing health insurance at a rate similar to luxury items does not seem rational. Further, health insurance has become a necessity for citizens in view of the pandemic and illnesses,” said Pathik Patwari, senior vice president, GCCI.

“At the same time, it will mean less financial burden on companies and industries in ensuring the well-being of employees and their families,” he added.