Nitin Gadkari urged FM Nirmala Sitharaman to remove GST on life and medical insurance premiums

Union Minister of Road Transport and Highways, Nitin Gadkari, has asked Finance Minister Nirmala Sitharaman to eliminate the 18% GST on life and medical insurance premiums. He contends that this tax adds to the uncertainties of life and obstructs the growth of the insurance sector.

In his letter dated July 28, Gadkari said, “You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premiums on priority as it becomes cumbersome for senior citizens.”

Life and medical insurance premiums are subject to an 18 per cent GST.

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Nitin Gadkari on GST on Insurance Premiums

The letter further said, “Similarly, the 18 per cent GST on medical insurance premiums is proving to be a deterrent for the growth of this segment of business which is socially necessary.”

The letter addressed the concerns raised by the Nagpur Divisional Life Insurance Corporation Employees Union, which had presented a memorandum to the minister outlining the issues faced by the industry.

Referring to the memo, the minister said, “Levying GST on life insurance premiums amounts to levying tax on the uncertainties of life. 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.”

The minister noted that the union highlighted issues such as the unequal treatment of savings through life insurance, the reinstatement of income tax deductions for health insurance premiums, and the consolidation of public sector general insurance firms.

GST Council to Revisit Tax Rate on Insurance Premiums

The GST Council, which is tasked with decisions on tax matters, is set to convene in August. The last meeting was held on June 22. Finance Minister Nirmala Sitharaman has previously encountered similar demands to reconsider the GST rate on health insurance premiums. In June of this year, the Confederation of General Insurance Agents’ Associations of India urged the government to lower the GST on individual health insurance policies from 18% to 5%.

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