Impact of GST Rate Cuts on Insurance Companies: The ITC Conundrum and Rising Costs

• Insurance companies in India oppose GST exemption on term insurance policies
• Removing or lowering GST would eliminate Input Tax Credit benefits for insurers
• Insurers could lose up to 11% on term plans due to lost ITC benefits
• Higher expenses for insurers may lead to increased premiums for policyholders
• Industry calls for a minimum 12% GST rate on term insurance to retain ITC benefits
• Insurers seek reduction in GST rate on insurance commission services if tax on term plans is lowered
• Government aims to reduce GST rates on essential services to benefit consumers
• Insurers argue that cutting GST without preserving ITC raises production costs
• Ministerial panel to revisit issue after concerns raised by IRDAI and finance ministry
• Insurers warn that reducing or removing GST without retaining input credits could make term insurance more expensive for consumers.

Source: taxscan.in

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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