Since the onset of the Covid-19 pandemic, Health Insurance coverage has become a huge cost component for companies. While is facing increases in costs, theGujarat Chamber of Commerce and Industry(GCC) on Monday made a representation to the Union finance minister asking that theGSTrate 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 theUnion 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.