Union Minister Nitin Gadkari has appealed to Finance Minister Nirmala Sitharaman to remove the Goods and Services Tax (GST) on life and medical insurance premiums. Gadkari wrote a letter to the finance minister which followed suggestions from the Nagpur Divisional Life Insurance Corporation Employees Union regarding the life and general insurance industry.
“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,” Gadkari mentioned in his letter dated 28 July 2024. The minister emphasised that taxing medical insurance acts as a deterrent to the growth of this ‘socially important sector’.
Currently, premiums paid by policyholders for all types of life and medical insurance policies are subject to an 18 per cent GST rate.
While the life, general, and health insurance sectors have been calling out for a reduction in GST on life and medical insurance premiums, Gadkari seeks a complete removal of GST on both the life and medical insurance sectors.
The minister stated that ‘levying GST on life insurance premium amounts to levying tax on the uncertainties of life.’
He said, “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.”
As mentioned in the letter, the Union also raised points related to Differential Treatment to Savings by way of Life Insurance, the re-introduction of the IT deduction for health insurance premiums, and the consolidation of public and sector general insurance companies.
Gadkari has requested FM to consider the suggestion of withdrawal of GST on life and medical insurance premiums ‘on priority’ as it becomes cumbersome for senior citizens who often face high premiums on health insurance.
