Insurance Stocks Gain as GoM Proposes GST Waiver on Life and Health Insurance

Market Performance

On Thursday, August 21, shares of major insurance companies including SBI Life, HDFC Life, LIC, ICICI Lombard, and ICICI Prudential saw an upward trend in early trade.

• At 9:20 a.m., these stocks were trading higher by 1–2% each.

The rally was triggered after reports indicated a possible exemption of 18% Goods and Services Tax (GST) on life and health insurance policies purchased by individuals.

Main News

The GST Group of Ministers (GoM) has recommended waiving the 18% GST currently imposed on health and life insurance premiums.

• This move aims to make insurance policies more affordable.
• It is also expected to improve insurance penetration in India’s underinsured market.

The proposal will be taken up by the GST Council for final approval after consultations with the states, though a few states have raised concerns about possible revenue losses from the exemption.

Company Details

• SBI Life share price: Gained around 1–2% during morning trade.
• HDFC Life share price: Also traded higher by 1–2%.
• LIC share price: Saw buying interest, moving in line with sector gains.
• ICICI Lombard share price: Added close to 2% in early trading.
• ICICI Prudential share price: Also witnessed an upward move of about 1–2%.

Additional Context

The proposal to cut GST on insurance comes after Prime Minister Narendra Modi’s Independence Day speech, where he hinted at the rollout of GST 2.0 before Diwali.

• The rationalisation may lead to two major slabs of 5% and 18%, along with a sin tax rate of 40%.

Summary

On August 21, shares of SBI Life, HDFC Life, LIC, ICICI Lombard, and ICICI Prudential rose in early trade after the GoM proposed scrapping the 18% GST levied on life and health insurance premiums. While this decision awaits approval from the GST Council, it is seen as a step that could boost affordability and improve penetration of insurance products in India.