 "Please remove GST on life, medical insurance premiums: Nitin Gadkari to FM")
Union Minister of Road Transport and Highways Nitin Gadkari has requested Finance Minister Nirmala Sitharaman to remove the 18 per cent goods and services tax (GST) on life and medical insurance premiums. He argues that this tax burdens the uncertainties of life and hinders the sector’s development.
In his letter dated July 28, Gadkari said, “You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premiums on priority as it becomes cumbersome for senior citizens.”
Life and medical insurance premiums are subject to an 18 per cent GST.
The letter further said, “Similarly, the 18 per cent GST on medical insurance premiums is proving to be a deterrent for the growth of this segment of business which is socially necessary."
The letter addressed the concerns raised by the Nagpur Divisional Life Insurance Corporation Employees Union, which had presented a memorandum to the minister outlining the issues faced by the industry.
Referring to the memo, the minister said, “Levying GST on life insurance premiums amounts to levying tax on the uncertainties of life. The Union feels that the person who covers the risk of life’s uncertainties to give some protection to the family should not be levied tax on the premium to purchase cover against this risk."
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The minister noted that the union highlighted issues such as the unequal treatment of savings through life insurance, the reinstatement of income tax deductions for health insurance premiums, and the consolidation of public sector general insurance firms.
The GST Council, responsible for making decisions on the tax, is scheduled to meet in August. The last meeting took place on June 22.
Nirmala Sitharaman has faced similar calls to reassess the GST rate on health insurance premiums before. Earlier this year, in June, the Confederation of General Insurance Agents' Associations of India urged the government to reduce the GST on individual health insurance policies from 18 per cent to 5 per cent.
The organisation, representing non-life insurance agents, argued that a lower GST rate would promote the purchase of these policies as a means of social security. They also pointed out that health insurance premiums have nearly doubled over the past five years.
(With agency inputs)