Eliminate 18% GST on Life & Medical Insurance Premiums: Nitin Gadkari’s Urgent Appeal
Union Minister of Road Transport and Highways, Nitin Gadkari, has made a compelling case for removing the 18% Goods and Services Tax (GST) on life and medical insurance premiums. In a recent letter to Finance Minister Nirmala Sitharaman dated July 28, Gadkari highlighted the adverse effects of this tax on both the insurance sector and individuals.
Nitin Gadkari’s Letter to Finance Minister
In his letter, Gadkari argued that the imposition of GST on insurance premiums is akin to taxing the uncertainties of life. He stressed that such taxation impedes the growth of the insurance sector, which is crucial for providing financial security against life’s unforeseen events.
“You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premiums on priority,” Gadkari stated. He emphasized that this tax burden is particularly onerous for senior citizens, making it difficult for them to secure adequate insurance coverage.
Impact on the Insurance Sector
Currently, life and medical insurance premiums are subjected to an 18% GST. Gadkari pointed out that this tax rate is a significant deterrent for the growth of the insurance industry, which plays a socially necessary role. The high tax on medical insurance premiums, in particular, has been criticized for discouraging people from securing essential health coverage.
Gadkari’s appeal follows a memorandum from the Nagpur Divisional Life Insurance Corporation Employees Union. The memorandum outlined several challenges faced by the insurance industry, including the negative impact of GST on premiums. Representing Nagpur in the Lok Sabha, Gadkari voiced the union’s concerns, arguing that taxing life insurance premiums is unfair to those who invest in policies to protect their families.
Calls for Policy Reconsideration
In addition to his request for removing GST on insurance premiums, Gadkari also highlighted other related issues. These include the need for differential treatment of savings through life insurance, reintroduction of income tax deductions for health insurance premiums, and consolidation of public sector general insurance companies.
The GST Council, responsible for tax-related decisions, is scheduled to meet in August. This meeting will be an opportunity to address Gadkari’s concerns and consider potential changes to the GST framework for insurance premiums.
Conclusion
Nitin Gadkari’s push to eliminate the 18% GST on life and medical insurance premiums underscores the growing concern about the financial burden on individuals and the insurance sector. As the GST Council prepares for its upcoming meeting, the fate of this crucial tax relief will be closely watched by many.
