GST on Health Insurance: A Burden on India's Healthcare?

The GST Impact on Health Insurance

As India grapples with the challenges of an underdeveloped healthcare system, the Goods and Services Tax (GST) on health insurance policies has sparked significant debate. Critics argue that the 18% GST rate adds to the cost burden, making essential health coverage unaffordable for many Indians.

Key Concerns:

• Affordability: With health insurance premiums already high, the GST only exacerbates the issue, particularly for the 40 crore Indians without financial protection.
• Penetration: India’s insurance penetration rate is much lower than global standards, partly due to the additional cost imposed by GST.
• Impact on Senior Citizens: The elderly, often on limited income, find the rising premiums particularly burdensome, deterring them from maintaining health coverage.

Experts Weigh In

Experts from various sectors have differing views on how to address the GST impact on health insurance. Parthanil Ghosh from HDFC ERGO suggests a reduction rather than elimination of GST, which could lower premiums while still allowing insurers to claim input tax credits.

Possible Solutions:

• Reduced GST Rates: Lowering the GST from 18% to a lower percentage could make premiums more affordable without eliminating the tax entirely.
• Government Intervention: The call for a review of GST on health insurance has reached the halls of government, with some ministers and policymakers advocating for change.

The Path Forward

As India aims to increase insurance penetration and make healthcare more accessible, addressing the GST on health insurance remains a critical step. Whether through reduction or reform, any move that makes health insurance more affordable could have a significant impact on the nation’s healthcare landscape.