Shares of insurance companies such as HDFC Life, SBI Life, Niva Bupa, and ICICI Lombard rose 4–9% on 18th August amid expectations that the Goods and Services Tax (GST) on health and life insurance may be reduced to 5% or even granted a complete exemption.

For health insurance, the proposed GST changes may be limited to senior citizens and low sum assured products. Alternatively, they could be applied across all policies. In the case of life insurance, it is still unclear whether the benefit will cover only pure term plans. There is also the possibility that it might extend to savings-linked products.

A key issue for both health and life insurance is whether the GST cut or exemption will be accompanied by Input Tax Credit (ITC). Currently, the 5% GST rate does not allow ITC, and there is no exemption in place.

If GST is reduced to 5% or removed without ITC, premiums are likely to increase further. On the other hand, if the cut or exemption comes with ITC, it would help lower insurance premiums.

At 12:35 PM, HDFC Life was trading 1.85% higher at Rs 803.35. Additionally, Niva Bupa surged 7.65% to Rs 88.20. ICICI Lombard gained 4.75% to Rs 1,988.40 on NSE.

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