LIC, HDFC Life, SBI Life, Go Digit, ICICI Pru, others rally as govt exempts health, life insurance from GST; what you need to know

GST rate cut on health and life insurance: Announcing the outcome of the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman on September 3 said that all individual life insurance policies, whether term life, unit linked insurance plan (ULIP) or endowment policies, and subsequent reinsurance are exempt from GST. Shares of individual health and life insurance stocks rallied on Thursday, September 4, as life and health insurance premiums are now exempted from Goods and Services Tax (GST). Shares of Life Insurance Corporation of India (LIC) were trading 1.6% higher, while SBI Life Insurance advanced 0.6% on the National Stock Exchange at 10:49 am. Similarly, HDFC Life Insurance stock was also up 0.4%. Scrips of ICICI Lombard General Insurance, General Insurance Corporation, and ICICI Prudential Life Insurance ascended 2.5%, 1.5%, and 1.5%, respectively. Go Digit General Insurance shares also saw an uptick of 0.2%. No GST on life and health insurance premiums Announcing the outcome of the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman on September 3 said that all individual life insurance policies whether term life, unit linked insurance plan (ULIP) or endowment policies, and subsequent reinsurance are exempt from GST. All individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance thereof, will also be exempt from GST, she said. ALSO READ | SENSEX surges over 650 points, NIFTY50 firm above 24,850; here are key factors boosting the rally Since its inception in July 2017, GST at the rate of 18% has been levied on premiums paid towards health insurance and life insurance. "We will make sure that companies pass on the GST rate reduction and make insurance affordable for the common man and increase the insurance coverage in the country," she said. The new rates would come into effect from September 22, which marks the first day of Navratri. In the financial year 2023-24 (FY24), the government has collected ₹16,398 crore from GST levied on healthcare and life insurance. GST Rate Cut LIVE: New GST rates, applicable date, impact of slab changes, rules and FAQs Of this, ₹8,135 crore was from life insurance and ₹8,263 crore from health insurance. Furthermore, ₹2,045 crore was also raised as GST from re-insurance on life and health insurance last fiscal, including ₹561 crore from reinsurance on life and ₹1,484 crore on health care. GST on healthcare and life insurance services brought in ₹16,770 crore in FY23, including ₹9,132 crore from life insurance and ₹7,638 crore from healthcare insurance. The 56th GST Council, chaired by the Finance Minister and comprising ministers from all states, has agreed on two tax rates of 5% and 18%. A special 40% rate would be levied on a select few items. With PTI inputs