If your name is linked to government-run insurance policies, it will be a welcome development. The government is currently preparing to provide positive news to those who hold life insurance. Now the central government can decide to exempt term life insurance policies from the Goods and Services Tax (GST), which will be like a big update.
For the past several days, there has been a demand to exclude insurance policies from GST. Therefore, the government is poised to make a significant decision on this matter soon, akin to a major announcement. The government has fixed the GST rate for term insurance plans at 18 percent. It is considered applicable to the total premium amount. With the end of the tax burden on insurance companies, the demand for products is likely to increase significantly. However, there has been no official announcement yet. Media reports are making such claims.
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There will be no exemptions in this case.
Simultaneously, an anonymous official revealed that the GST Council meeting on September 9 is likely to make this official decision. According to the official, life insurance policies with an investment component will not be exempt, so there is no issue.
Exempting it will not make any sense. However, it is essentially regarded as a form of investment. The official further said that we have to exempt the uncertainties of life, not investments. On the other hand, according to Sandeep Sehgal, tax partner of AKM Global, the removal of GST from life insurance is a welcome decision. This will make the insurance scheme very accessible, creating more business opportunities for companies.
What is an insurance-investment-linked policy?
Various organizations offer term life insurance, a pure security product that ensures financial stability for individuals in the event of the policyholder’s death. Actually, there is no reduction in investment in it. On the other hand, there is also an investment component in an investment-linked life insurance policy. Such policies have a high premium because they provide both security and investment benefits.
