New Delhi: In a recent development, Union Minister for Road Transport and Highways, Nitin Gadkari, has formally requested Finance Minister Nirmala Sitharaman to remove the 18% Goods and Services Tax (GST) currently imposed on life and medical insurance premiums.
In his letter, Gadkari highlights that the GST on these premiums amounts to a tax on the protection against life's uncertainties, which he believes is unjust. He argues that this tax discourages individuals from obtaining necessary insurance coverage, which is essential for financial security.
In the letter, he said: "Main issue raised by the Union is related to withdrawal of GST on Life and Medical Insurance Premium. Both life insurance and medical insurance premiums attract a GST rate of 18 percent. Levying GST on life insurance premium 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. 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. Therefore, they have urged withdrawal of GST as mentioned above," he added.
These proposals come in response to a memorandum submitted by the Nagpur Divisional Life Insurance Corporation Employees Union, which has raised concerns about the current challenges facing the insurance industry.