The Standing Committee on Finance, led by Jayant Sinha, has advocated for a reduction in the Goods and Services Tax (GST) rate on insurance products, particularly health and term insurance. Currently set at 18%, the committee suggests that this high tax rate poses a significant financial burden for individuals seeking insurance coverage.
The committee’s report, presented in Parliament, highlights the adverse impact of high GST rates on insurance uptake, citing it as a deterrent for potential policyholders. In an effort to make insurance more accessible and affordable, the committee proposes a reduction in GST rates specifically for health insurance products, including policies tailored for senior citizens and microinsurance plans.
Despite recent growth in Bharat’s insurance sector, challenges persist in achieving widespread coverage and uptake. While the industry has witnessed dynamic expansion, the penetration and density of insurance products remain relatively low compared to advanced economies.
India accounts for a mere 2% of the global insurance market, indicating substantial room for growth and improvement. According to data from Swiss Re, Bharat ranked tenth globally in insurance business in 2021, underscoring the sector’s potential for further development.
The committee emphasizes the importance of educating consumers about the benefits of various insurance products to drive adoption and awareness.
To address this gap, the committee recommends launching an extensive awareness campaign in collaboration with insurance companies and the Insurance Regulatory and Development Authority of India (IRDAI). This campaign aims to inform the public about the advantages of different insurance products, highlighting real-life examples such as insurance claims during natural disasters and the COVID-19 pandemic.
The proposed campaign will feature endorsements from reputable personalities who have availed themselves of diverse insurance products, advocating for their necessity in safeguarding one’s family and assets.
Through this joint initiative, the committee aims to foster a culture of insurance awareness and inclusivity, encouraging individuals to prioritize financial protection for themselves and their loved ones. By promoting greater understanding and accessibility of insurance products, the committee envisions a future where all segments of society can benefit from essential insurance coverage.
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