GST Cut on Insurance May Not Lower Premiums; Potential 12-18% Increase Expected

The GST on individual health and life insurance premiums will be reduced from 18% to 0% starting September 22, 2025. However, the impact on premiums depends on whether they are classified as nil-rated or exempt. Nil-rated allows insurers to claim input tax credit (ITC), while exempt does not, potentially increasing operating costs and leading to premium hikes. Standalone health insurers may face larger increases, with potential rises of 12-18%. The industry is awaiting clarification from the GST Council to determine if the full benefit of the GST cut can be passed to policyholders.

Source: a2ztaxcorp.net

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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