Abolish tax on life, health insurance premiums: Gadkari writes to FM

Union Minister of Road Transport and Highways Nitin Gadkari has requested Finance Minister Nirmala Sitharaman to withdraw the 18 per cent goods and services tax (GST) on life and medical insurance premiums.

Gadkari said in his letter that he is writing to the finance minister following a memorandum from the Nagpur Divisional Life Insurance Corporation Employees Union.

"The main issue raised by the Union is related to the withdrawal of GST on Life and Medical Insurance Premium. Both life insurance and medical insurance premiums attract a GST rate of 18 per cent. Levying GST on life insurance premium amounts to levying tax on the uncertainties of life," the road transport and highways minister has written.

 

"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. Similarly, the 18 per cent GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business, which is socially necessary," he said.

The insurance industry has demanded a reduction in the GST levied on insurance premiums to enhance the appeal of insurance products. Since insurance is a "pull" product rather than a "push" product, lowering the GST would help make these products more attractive to consumers.  

Gadkari added the Union also highlighted issues concerning differential treatment to savings by way of life insurance, re-introducing the IT deduction for health insurance premiums and consolidating public and sector general insurance companies.

Gadkari's letter to Sitharaman comes amid criticism from several quarters over the first Budget of the third Narendra Modi government, presented on July 23.