GIC Re, NIACL, Star Health stocks fall over 6% as Council defers decision on GST relief for life, health insurance premiums

GIC Re, NIACL, Star Health stocks fall over 6% as Council defers decision on GST relief for life, health insurance premiums

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26 Aug, 2025 12:21

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Insurance stocks were trading in the red on December 23 as GST Council deferred a decision on relief for life, health insurance premiums.

The GST Council deferred a decision to exempt and reduce the Goods and Services Tax on health and life insurance premiums during its meeting on December 21 since it required more time to arrive at a consensus.

A Group of Ministers (GoM) was said to have recommended exempting GST on health insurance for senior citizens and term life insurance as well as lowering the indirect tax rate to 5% on health insurance with a coverage of Rs 5 lakh.

Presently, premiums paid on life and medical insurance largely attract a GST rate of 18%.

This led to a decline in share prices of the insurance stocks.

At 10:25 am on December 23, New India Assurance Company Ltd (NIACL) shares were trading over 6% lower at Rs 200.78 apiece while the shares of General Insurance Corporation of India (GIC Re) were trading nearly 5% lower at Rs 476.75 apiece.

Star Health stock was trading 2% lower at Rs 475 while the scrip of HDFC Life was down 0.7% at Rs 619.45.

"The GoM on health insurance-related GST work requires more time as IRDAI's inputs are awaited. GoM on insurance has discussed relief on health, life insurance in detail. But after getting IRDAI's inputs the GoM will finalise report," Finance Minister Nirmala Sitharaman said during a press briefing after the GST Council meeting.

It is expected that if the benefit of GST relief is passed on to consumers in terms of cheaper insurance policies, the amount of insurance policies sold will increase, compensating for the revenue loss as elasticity of demand exists in this sector.

The GoM's proposal on giving relief on tax on premiums of health and life insurance policies was expected to result in an annual revenue loss of approximately Rs 2,600 crore.