Road, transport and highways minister Nitin Gadkari has written to finance minister Nirmala Sitharaman, seeking withdrawal of the 18 percent Goods and Services Tax (GST) on life and medical insurance premiums, saying it amounts to taxing the uncertainties of life and restricts the sector’s growth.
“You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for the senior citizens,” Gadkari said in his letter dated July 28. Moneycontrol has reviewed the copy of the letter.
Both life and medical insurance premiums attract a GST of 18 percent.
“Similarly, the 18 percent GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business which is socially necessary,” the minister said.
The letter was in response to the Nagpur Divisional Life Insurance Corporation Employees Union, which submitted a memorandum to the minister, highlighting the problems faced by the industry.
Gadkari represents Nagpur in the Lok Sabha.
“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,” the minister said referring to the memo.
The minister said the union also pointed to the "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."
The GST Council, which takes a call on the tax, will meet in August. The last meeting was on June 22.
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