New Delhi, Aug. 19 -- The government's move to reduce or abolish the Goods and Services Tax (GST) on insurance premiums has triggered mixed reactions from policy-holders and insurers.

While consumers could see significant relief, insurance companies are worried about losing input tax credit (ITC), which may increase their operating costs.

Currently, an 18 per cent GST is levied on life, health and ULIP premiums. Industry experts argue that this acts as a barrier to wider insurance adoption.

Abolishing GST or reducing it to 5 per cent could make insurance more affordable and help improve penetration, which stood at just 3.7 per cent in FY24, according to IRDAI.

For policy-holders, the impact would be direct. A health insurance plan cos...