In a recent move aimed at easing the financial burden on policyholders, Union Minister for Road, Transport, and Highways Nitin Gadkari has written to Finance Minister Nirmala Sitharaman requesting the withdrawal of the 18% Goods and Services Tax (GST) on life and medical insurance premiums. Gadkari argues that this tax penalizes individuals for safeguarding themselves and their families and hampers the growth of the insurance sector.
In his letter, Gadkari emphasized that the current GST rate “amounts to taxing the uncertainties of life” and has become an obstacle to the sector’s development. He highlighted that both life and medical insurance premiums are subject to this steep tax, which he believes is particularly burdensome for senior citizens.
“You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premiums on priority as it becomes cumbersome for the senior citizens,” Gadkari stated in his correspondence to Sitharaman.
The minister also addressed concerns raised by unions during recent meetings, which included issues such as differential treatment of savings through life insurance, the need to reintroduce income tax deductions for health insurance premiums, and the consolidation of public sector general insurance companies.
“The 18 percent GST on medical insurance premiums is proving to be a deterrent for the growth of this segment of business, which is socially necessary,” Gadkari added. He argued that imposing GST on life insurance premiums is akin to taxing the act of preparing for life’s uncertainties and providing protection to families.
Gadkari’s request underscores a broader discussion about the role of taxation in financial planning and the need to support sectors crucial to public welfare. The proposed removal of GST on insurance premiums could potentially make life and medical insurance more affordable and accessible to a wider audience, including the elderly and low-income families.