Union Minister of Road Transport and Highways Nitin Gadkari urged Union Finance Minister Nirmala Sitharaman to consider withdrawing 18 per cent goods and services tax (GST) on life and medical insurance premiums. In his letter to Sitharaman, Gadkari said that Nagpur Divisional Life Insurance Corporation Employees Union submitted a memorandum to him on these issues.
He also said that levying an 18 per cent GST on life and medical insurance premiums "amounts to levying tax on the uncertainties of life."
The Union, Gadkari mentioned in his letter, believes that people should not be levied tax on the insurance premiums to purchase cover against this risk.
"Similarly, 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," he said.
Nitin Gadkari further stated that the Union also raised the issue of Differential Treatment to Savings through life insurance, re-introduction of IT deduction for health insurance premium as well as consolidation of public sector general insurance companies.
He also said that paying GST on life and medical insurance premium is challenging for senior citizens.
“You are requested 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,” Gadkari said in his letter.
This, however, is not the first time that Nirmala Sitharaman has been requested to reconsider the GST on health insurance premiums. In June this year, the Confederation of General Insurance Agents' Associations of India appealed to the government to slash GST on individual health policies from 18 per cent to 5 per cent.
The umbrella body of non-life insurance agents said that this would help encourage people to buy these policies as a measure of social security. The body also highlighted the premium of health insurance has nearly doubled in the last 5 years.
The number of lives covered and number of policies issues, however, still remained less. The association said in its letter to Sitharaman that policy renewal rates continued to dip due to frequent hikes in premium rates and rising medical inflation.
“The average percentage of renewal of retail health insurance policies is at 65 per cent – 75 per cent. From this, it is very much evident that most of the policyholders are not able to pay the premium due to frequent hike in insurance premiums and very high rate of GST,” the association said in its letter to Sitharaman.