Nitin Gadkari’s Call to Withdraw the 18% GST on Life and Medical Insurance Premiums – Is the 18% GST on Insurance Justified?

“The 18% GST on Life and Medical Insurance premiums is seen as a deterrent to the growth of this essential sector, which provides vital social benefits” – Minister for Road Transport and Highways

The Controversy Over 18% GST on Life and Medical Insurance : Nitin Gadkari’s Bold Stance

In a recent letter to Finance Minister Nirmala Sitharaman, Nitin Gadkari, the Minister for Road Transport and Highways, has advocated for the removal of GST on life and medical insurance premiums. The communication follows a memorandum submitted by the Nagpur Divisional Life Insurance Corporation Employees Union, highlighting several issues affecting the insurance industry.

The Union’s primary concern is the current 18% GST rate on both life and medical insurance premiums. Gadkari emphasized that taxing life insurance premiums essentially means taxing the uncertainties of life, which he argued is unfair. The Union believes that individuals who seek to protect their families against life’s uncertainties should not be taxed for purchasing such coverage.

Additionally, the 18% GST on medical insurance premiums is seen as a deterrent to the growth of this essential sector, which provides vital social benefits. The Union also brought up concerns about the differential treatment of savings through life insurance, the need to reintroduce income tax deductions for health insurance premiums, and the idea of consolidating public sector general insurance companies.

Consider withdrawal of 18% GST on Life and Medical Insurance Premiums

Gadkari urged the Finance Minister to prioritize the consideration of removing GST on life and medical insurance premiums, particularly noting the difficulties it poses for senior citizens.

In his letter, Nitin Gadkari stated, “Levying GST on life insurance premiums amounts to levying a tax on the uncertainties of life. The Union feels that a person who seeks to mitigate these uncertainties by providing some protection to their family should not be taxed on the premium paid for such coverage. Similarly, the 18% GST on medical insurance premiums is proving to be a deterrent to the growth of this segment, which is socially necessary.”

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