Gadkari urges removal of 18% GST on life and medical insurance premiums

Gkari on Insurance: Union Minister of Ro Transport and Highways, Nitin Gkari, has formally requested Finance Minister Nirmala Sitharaman to withdraw 18 per cent goods and services tax (GST) imposed on life and medical insurance premiums. In his letter, Gkari described GST as an undue burden on individuals seeking protection against life's uncertainties. This appeal comes in response to a memorandum from Nagpur Divisional Life Insurance Corporation Employees Union.

Tax on Uncertainties of Life

Gkari’s appeal highlights financial strain that 18 per cent GST places on policyholders, particularly senior citizens who find it challenging to manage se ditional costs. He argued that taxing insurance premiums, which are essential for mitigating risks, is counterproductive and discourages people from purchasing necessary coverage.

Union’s Concerns and Recommendations

memorandum submitted by Nagpur Union also dressed several or key issues:

Differential Treatment of Life Insurance Savings: Union has called for a reevaluation of how savings through life insurance are treated under tax regime.

Reintroduction of Tax Deductions for Health Insurance: re is a push to reinstate income tax deductions for health insurance premiums, which were previously available and are considered beneficial for policyholders.

Consolidation of Public Sector Insurance Companies: Union has suggested that consolidating public sector general insurance companies could enhance efficiency and service delivery.

Gkari emphasised that current GST rate makes insurance premiums increasingly burdensome, particularly for elderly, and has urged Sitharaman to prioritise this issue.

Previous Appeals and Industry Reactions

This is not first time government has faced calls to reconsider GST on insurance premiums. Earlier in June, Confederation of General Insurance Agents' Associations of India petitioned for a reduction in GST on individual health policies from 18 per cent to 5 per cent. Confederation argued that high GST rates, combined with rising premiums, are discouraging policy purchases and leing to lower renewal rates.

Confederation believes that lowering GST rate would make health insurance more affordable, encouraging greater uptake and ensuring that more people are covered.

appeal by Gkari and Confederation's earlier request reflect growing concern about impact of high GST rates on insurance affordability and accessibility. As government considers se requests, outcome will be pivotal in shaping future of insurance policy uptake and financial protection for individuals across India.