NEW DELHI: Union Minister of Road Transport and Highways Nitin Gadkari, has formally requested Finance Minister Nirmala Sitharaman to withdraw 18 per cent Goods and Services Tax (GST) currently imposed on life and medical insurance premiums. This appeal is based on concerns raised by Nagpur Division Life Insurance Corporation Employees Union. This union submitted memorandum outlining challenges faced by insurance industry.
In his letter to Finance Minister Gadkari highlighted Union’s argument that taxing life insurance premiums equates to taxing uncertainties of life itself. He noted, "Levying GST on life insurance premiums amounts to levying tax on uncertainties of life." Union feels that person who covers risk of life's uncertainties to give protection to family, should not be levied tax on premium to purchase cover against this risk.
The primary issue raised by union as conveyed by Gadkari, is withdrawal of GST on both life and medical insurance premiums. Currently these premiums are subject to 18 per cent GST rate. This rate, the Union argues is excessively burdensome.
Gadkari also emphasized adverse impact of GST on medical insurance premiums stating, "Similarly 18 per cent GST on medical insurance premiums is proving to be a deterrent for growth of this segment of business which is socially necessary." He underscored that this tax serves as significant obstacle to expansion of socially essential service.
In conclusion, Gadkari urged Sitharaman to prioritize consideration of this suggestion. He highlighted difficulties faced by senior citizens under current tax regulations. "In view of above you are requested to consider suggestion of withdrawal of GST on life and medical insurance premium on priority. It becomes cumbersome for senior citizens as per rules with due verification," he stated.
This appeal marks significant step in addressing tax burden on insurance premiums. Many believe it hinders accessibility and growth of essential insurance services. The outcome of this request remains to be seen. It has certainly brought attention to need for policy adjustments in insurance sector.
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