Health insurance stocks experienced gains in today’s trade, following a series of GST reduction proposals by GoM
Health insurance stocks surged by up to 11% on December 3, following a series of proposals made by the Group of Ministers (GoM) on GST rate rationalisation for the sector.
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The GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, suggested reducing the GST on health insurance premiums from 18% to 5%. Additionally, the GoM proposed exempting GST on health insurance premiums for senior citizens, as well as for non-senior citizens with coverage of up to Rs 5 lakh annually.
The proposals also included a suggestion to exempt GST on pure term life insurance premiums, which are currently taxed at 18%. The GST Council is scheduled to meet in Jaisalmer on December 21 to review these recommendations for both life and health insurance premiums.
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These developments positively impacted health insurance stocks. Niva Bupa saw a rise of over 11%, while Star Health gained nearly 4% on December 3. By 12:15 PM, Niva Bupa’s shares were trading 10% higher at Rs 81.88, and Star Health’s stock was up nearly 4% at Rs 485.30.
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Finance Minister Nirmala Sitharaman indicated that if the GST Council approves the rate reduction, the cost of insurance for policyholders would likely decrease. In her written reply in the Lok Sabha, she explained that the GST Council had already recommended forming a GoM to review the GST rates on life and health insurance. Sitharaman assured that a reduction in GST would directly benefit consumers, as lower rates would reduce the overall insurance cost, especially in a competitive market with multiple insurers.
Currently, an 18% GST is levied on premiums for both life and health insurance policies.
