Shares of insurance stocks such as Life Insurance Corporation (LIC), HDFC Life, SBI Life, ICICI Pru and ICICI Lombard were trading higher on Monday. As part of a larger tax rate rationalisation exercise, the Goods and Services Tax (GST) Council decided that 5 percent GST would be levied on non-ICU hospital rooms with room rent above Rs 5,000 per day.

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This GST norm is being implemented even as industry body FICCI wrote to Union Finance Minister Nirmala Sitharaman asking for relief as the move would increase the cost of healthcare for the middle class.

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A section of the market believes that a higher GST rate would lead to higher premiums, which could discourage people from opting for health insurance. At the same time, the other pocket believes that a higher GST rate might not deter people from renewing or opting for health insurance.

"People will go for health insurance, not because it is less expensive, but because they need it. So, a higher GST rate is highly unlikely to deter them from taking a health insurance cover," said Purvesh Shelatkar, head of institutional broking, Monarch Networth Capital.

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Suneeta Reddy, managing director of Apollo Hospitals, however, said the impact of 5 percent GST won’t be significant as it is for high-end beds.

"I am sure patients will be able to pay Rs 250 (per day). The fact of the matter is that there is an embedded cost of 6 percent due to GST in the hospital system. So, we need to have conversations to see how we could rationalise all these costs," she told CNBC-TV18 in an interaction.

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