Nitin Gadkari calls for withdrawal of GST on life and health insurance premiums
File photo: Union Minister Nitin Gadkari (Photo: PTI)
India’s Minister for Road Transport and Highways Nitin Gadkari has requested Finance Minister Nirmala Sitharaman to withdraw the Goods and Services Tax (GST) levied on life insurance and health insurance premiums. Currently, both life insurance and health insurance premiums attract a GST rate of 18 percent.
In a letter to Sitharaman, Gadkari noted that the Nagpur division of the Life Insurance Corporation Employees Union had submitted a memorandum outlining various concerns within the insurance industry. The major issue highlighted by the union was the demand for withdrawal of GST on life and health insurance premiums. Moreover, Gadkari in the letter stated that levying GST on these segments amounts to taxing the uncertainties of life.
“The union of employees feels that the person who covers the risk of life’s uncertainties to provide some protection to his family should not be taxed on the premium used to buy cover against this risk,” Gadkari wrote in his letter, adding that the 18 per cent GST on health insurance premiums is proving to be a deterrent to the growth of this socially necessary segment of the business community.
The insurance industry has long been demanding a reduction in the GST levied on insurance premiums to increase the attractiveness of insurance products. Since insurance is a “pull” product rather than a “push” product, reducing the GST would make these products more attractive to consumers.
Gadkari further said that the union has also raised issues regarding differential treatment of savings through life insurance, reintroduction of income tax deduction for health insurance premiums and consolidation of general insurance companies in the public sector.
First print: Jul 31, 2024 | 2:43 PM IST