Insurance stocks in India, including SBI Life Insurance, HDFC Life Insurance, and LIC, rallied on August 21 after the GST GoM led by Bihar Deputy CM Samrat Choudhary backed a proposal to exempt life and health insurance premiums from the current 18% GST. The final call rests with the GST Council.
Insurance stocks surged after the Group of Ministers (GoM) on Goods and Services Tax (GST), headed by Bihar Deputy Chief Minister Samrat Choudhary, backed the Centre’s recommendation to exempt individual life and health insurance premiums from the current 18% GST. The proposal will be taken up by the GST Council for final approval after consultations with states.
SBI Life Insurance, a leading private life insurer in India, saw its shares rise 1.7%, while HDFC Life Insurance, known for its strong market presence in individual insurance policies, gained 1.31%. State-owned Life Insurance Corporation of India (LIC), the country’s largest insurer, advanced 1.91% in morning trade.
Other major insurers also saw gains, with ICICI Lombard General Insurance climbing 1.28% and ICICI Prudential Life Insurance up 1.53%. General Insurance Corporation of India rose 2.75%. Among newer players, Star Health and Allied Insurance surged 3.02%, Go Digit General Insurance gained 2.03%, and Niva Bupa Health Insurance rallied 4.46%.
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The exemption proposal is part of the broader “GST 2.0” reforms, which Prime Minister Narendra Modi highlighted in his Independence Day speech. Reports indicate the new structure may rationalise tax rates into two slabs—5% and 18%—with a higher 40% sin tax on selected goods.
Avinash Singh, Senior Research Analyst at Emkay Global Financial Services Ltd, noted that insurers like SBI Life could benefit more given their lower cost structures. He added that the exemption would improve affordability for customers, with companies expected to pass on tax benefits through lower premiums.
While questions remain on the scope of coverage and Input Tax Credit implications, the GoM’s recommendation signals a positive shift for both the insurance sector and policyholders in India.
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