Nitin Gadkari, Minister for Road Transport and Highways, has formally requested Finance Minister Nirmala Sitharaman to reconsider and withdraw the 18% Goods and Services Tax imposed on life and medical insurance premiums. This appeal comes in response to a memorandum from the Nagpur Life Insurance Union, which highlighted several pressing issues within the insurance sector to the minster.
In a letter addressed to the Finance Minister, Gadkari emphasised that the memorandum's primary concern was the GST applied to life and medical insurance premiums.
Gadkari's argument reads that the 18% GST, currently applied to both types of premiums, penalises individuals seeking to protect themselves and their families against life's uncertainties. He contended that taxing life insurance premiums essentially taxes the very act of preparing for unforeseen circumstances, which is counterproductive to the objective of providing financial security.
The memorandum also expressed concerns that the 18% GST on medical insurance premiums acts as a significant barrier to the growth of this crucial segment. The high tax rate discourages individuals from investing in medical insurance, despite its crucial role in ensuring public health and financial stability during medical emergencies, Gadkari said in the letter.
In addition to the GST issue, "the union has also raised points related to differential treatment to savings by way of life insurance, the re-introduction of IT deductions for health insurance premiums, and the consolidation of public general insurance companies."
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