GST on health insurance is a persistent problem, but that is not the only factor which stops Indians from investing in their health and future, according to Parthanil Ghosh, Director and Chief Business Officer at HDFC ERGO General Insurance. In an exclusive conversation with ET Online, Ghosh said what are the significant challenges for insurers and policyholders when it comes to navigating the path of life and health insurance policies in India.

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Previously, a service tax was imposed on insurance premiums, which was replaced by GST in 2017. The current GST rate on insurance premiums is 18%. While a single GST rate has simplified and made the tax structure for policyholders more transparent, it has negatively impacted affordability by increasing the cost of health insurance premiums by the GST amount. However, with the Input Tax Credit available on the GST paid by the insurer, the net impact of GST is comparatively lower than it was under the Service Tax for some non-life insurance products, such as motor insurance.

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