Union Minister for Road Transport and Highways, Nitin Gadkari, has urged Finance Minister Nirmala Sitharaman to reconsider the imposition of Goods and Services Tax (GST) on life and medical insurance premiums.
In a letter written to Ms Sitharaman, Gadkari highlighted the key concerns that are impacting the insurance sector on behalf of the Nagpur Divisional Life
Insurance Corporation Employees Union.
Gadkari emphasized the Union’s plea to withdraw the 18% GST currently levied on both life and medical insurance premiums, terming it a “tax on on the uncertainties of life”.
“Levying GST on life insurance premium amounts to levying tax on the uncertainties of life,” Gadkari wrote.
The minister argued that taxing premiums intended to provide financial protection against life’s risks is not justifiable.
The Union, according to the letter, believes that the tax burden discourages individuals from purchasing necessary insurance coverages, which are crucial for societal welfare.
“The 18% GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business which is socially necessary,” Gadkari further noted.
In addition to the GST concerns, the Union has raised issues related to the differential treatment of savings through life insurance, advocating for the reintroduction of Income Tax (IT) deductions for health insurance premiums, and called for the consolidation of public and general insurance companies.
Gadkari urged the Finance Minister to “consider the suggestion of Withdrawal of GST on Life and Medical Insurance Premium on priority,” particularly as it poses a significant burden on senior citizens.