Life insurers want GST cut to 12%

Life insurance companies have called for a significant reduction in the goods and services tax (GST) to 12 per cent from the existing markup of 18 per cent. They argue that a financial product as critical as life insurance should have a low rate of GST to increase the penetration of life cover across the country.

"A financial product as critical as life insurance should have a reduced GST, and get exemption on stamp duty for mandated products, so that the costs are not increased for the end customer," said Tarun Chugh, MD & CEO, Bajaj Allianz Life.

"As per the GST norms, life insurance now falls under the slab of 18 per cent tax rate. Since insurance is an essential requirement of every individual for proper financial planning and protection, we believe that a reduction in GST to 12 per cent from 18 per cent or even lower is required," says Vighnesh Shahane, MD & CEO, IDBI Federal Life.

Besides, life insurers also want receipt of life insurance premia via the NRE account as an export service for GST reduction purpose.

"The government can clarify that the receipt of life insurance premium through the NRE account of an NRI, in Indian rupees, is permitted and qualifies as export of services for GST purposes. This will help save costs for NRIs, and in turn, boost the life insurance business", Deloitte said.

The industry has also asked for greater tax exemption for premium payers. "It would be an ideal time for the government to consider increasing the tax exemption limit for life insurance,” Chugh said.