Insurance could be exempted from GST so that insurers can claim ITC: LIC MD

LIC MD Ratnakar Patnaik urges the government to exempt insurance from GST to restore input tax credit and suggests raising the tax threshold for high-value insurance policies

On Monday, Ratnakar Patnaik, managing director of Life Insurance Corporation of India, urged the government to consider raising the threshold for high-value policies whose maturity proceeds are currently taxed. He suggested increasing it from ₹5 lakh to ₹10 lakh.

 

In February 2023, the government decided to tax income from traditional insurance policies — other than unit-linked products — with annual premiums above ₹5 lakh, to plug an arbitrage that high networth individuals were using to secure tax-free returns under Section 10(10D).

 

This has hit life insurers’ margins, prompting them to adjust their product mix to cushion the impact of the