While the GST Council is reported to discuss taxation of health and life insurance at its 54th meeting today, data shows between the Centre and states, tidy sums are being collected via the 18% GST on gross premium amounts. This, coupled with steady annual increases in premiums has constricted the growth of individual health insurance cover, reports Saikat Neogi.
The number of lives covered under individual policies in FY23 grew 2.5% to 52.8 million, but it was lower than FY21 level of 53.1 million. The total premiums under life and non-life insurance have grown from Rs 8.3 lakh crore in FY21 to Rs 10.4 lakh crore in FY23, but penetration has fallen to 4% from 4.2% during the same period. In fact, insurance penetration has stagnated over the last 10 years. Health insurance premium grew a hefty 22% to Rs 89,492 crore in FY23 from Rs 73,052 crore in FY22. In fact, insurance penetration has stagnated over the last 10 years.
To be sure, individual business accounts for 39% of the total health insurance premium, where the GST rate of 18% is applicable. Government-sponsored schemes such as Rashtriya Swasthya Bima Yojana, Jan Argoya Bima Policy and Niramaya Health Insurance Scheme are exempt from GST.