Life Insurers Throw a Tantrum Over GST Exemption on Term Policies
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The Insurance Industry's Latest Drama?
Life insurance companies in India are up in arms over the recent proposal regarding Goods and Services Tax (GST) exemption for term insurance policies. While this move was meant to make term insurance more pocket-friendly for policyholders, insurers are now crying foul, claiming it gives an unfair edge to term policies while other insurance products are left to foot the tax bill.?
?Insurers’ Grievances: The Taxing Truth?
Bigwig insurers argue that taking GST off term policies skews the market, giving them an unfair advantage. Meanwhile, their other prized offerings, like unit-linked insurance plans (ULIPs) and endowment policies, remain firmly under the GST umbrella. Essentially, they’re saying, "If we’re paying taxes, everyone should suffer equally!"?
?Government’s Take: Making Insurance Great Again??
The government, on the other hand, sees this as a noble effort to make term insurance accessible to the masses, aligning with its larger goal of improving financial security. After all, who doesn’t love a good tax break, especially when it’s on something as essential as term insurance??
?What Could Happen Next????
If the insurers insist, the GST council may not even exempt Term Insurance, meaning consumers will have to pay more for term insurance. But if the exemption is given, expect health insurance providers to start lobbying for similar perks on their health products (because, let’s be honest, no one likes being left out of a good tax-free party).?
领英推荐
?Our View: Exemption for Term Insurance, Not ULIPs: ? In our view, the government should offer the GST exemption on term insurance, as it is the best risk protection agent available for individuals and their families. For the individual, it gives peace of mind whereas for the family, it will ensure that their standard of living is not affected in case of unfortunate death of their loved ones .??
?We believe this exemption should not be extended to ULIPs, which combine insurance with investment, making them less focused on risk protection and more on wealth accumulation. There are far better products for wealth accumulation.?
?Stay Tuned for the Next Episode???
GST council has not yet decided on this important tax exemption. Meanwhile, if you’re a policyholder, grab some popcorn and stay updated—your insurance premiums might just be about to change.?
?Blog By : Tanvi Deshpande
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