Gadkari Urges Removal of 18% GST on Life, Medical Insurance

In his letter to the finance minister, Gadkari raised concerns of the Nagpur Division Life Insurance Corporation Employees Union, which had submitted to him a memorandum regarding the issues of the insurance industry. “The GST amounts to taxing the uncertainties of life and restricts the sector's growth as both life and medical insurance premiums attract a GST of 18 per cent,” the minister said.

In the letter, Gadkar also said that the Union feels that the person who covers the risk of life’s uncertainties to give protection to the family should not be levied tax on the premium to purchase cover against this risk. “The main issue raised by the union is related to the withdrawal of GST on life and medical insurance premiums,” he added.

The union minister also highlighted the issue of “differential treatment of savings by way of life insurance, reintroduction of income tax deduction for health insurance premiums and consolidation of public sector general insurance companies. Both life insurance and medical insurance premiums are subject to an 18 per cent GST rate. “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,” he said.

“In view of the above, you are requested to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for senior citizens as per rules with due verification,” he said.

The GST Council, which is responsible for tax-related decisions, is scheduled to meet in August, with its last meeting held on June 22. The GST Council is a constitutional body that makes recommendations related to the implementation of the GST in the country. It is also expected the issue of reviewing GST on life and medical insurance premiums may be put forth in the next GST council meeting.