Gadkari urges FM to withdraw 18% GST on life, medical insurance premiums

Days after the Union budget’s presentation, Union Minister of Road Transport and Highways Nitin Gadkari has asked Finance Minister Nirmala Sitharaman to remove the goods and services tax (GST) on life and medical insurance premiums which currently attract an 18 per cent GST rate.

Forwarding a memorandum by the Nagpur Division Life Insurance Corporation (LIC) Employees Union, Gadkari wrote in his July 28 letter: “In view of the above, you are requested to to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for the senior citizens as per rules with due verification along with other relevant points raised.”

A source said union representatives met Gadkari during his recent visit to Nagpur — he visits his constituency during the weekends — and that he forwarded their demands to the Finance Minister “as per procedure”.

The letter said: “Levying GST on life insurance premium 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. Similarly, the 18-percent GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business which is socially necessary. Therefore, they have urged withdrawal of GST as mentioned above.”

 

The letter also brought to the notice of the Finance Minister “other relevant points raised” by the union — reintroduction of a “separate and substantial exemption limit for life insurance premiums in the new tax regime”, including deductions allowed in the old tax regime under Section 80(D) on health insurance premium in the new tax regime, and merger of public sector general insurance companies into a single entity so that they benefit from economies of scale.

Congress MP Karti Chidambaram welcomed Gadkari’s letter to Sitharaman. He told news agency PTI on Wednesday: “I am very happy that Cabinet Minister Mr Gadkari has endorsed my demand that I made yesterday on the floor of the House to remove the 18 per cent GST levied on health and life insurance premium… We are a very under-insured country, and we must encourage people to insure themselves. By levying GST you are making the premiums expensive. You must treat insurance not only as a social cover but also as a mode of saving. So they should remove the GST.”

Source:: The Indian Express,  dated 01/08/2024.