Political pressure to scrap high GST on health insurance grows

The Trinamool Congress leader and Rajya Sabha MP, Derek O'Brien, has urged Finance Minister Nirmala Sitharaman to scrap the GST on health and life insurance premiums at the upcoming GST Council meeting scheduled for September 9.

In his letter to Nirmala Sitharaman, Derek O’Brien asked her to remove the 18% GST currently applicable to health and life insurance premiums. “The 18% Goods and Services Tax (GST) on health and insurance premiums is a burden on 45 crore Indians comprising the middle class. These insurance schemes provide financial security during times of illness, whether an illness, accident, or untimely death. It is our collective responsibility to ensure that all sections of the society can afford this crucial social security net,” he wrote.

It's a big barrier for middle-class people 

Derek O’Brien raised his concern that such a high GST rate will not allow people to opt for such social security policies and the existing users may even opt out of it.

“Levying a high GST rate on health and life insurance may lead to many citizens not opting for insurance schemes, or even existing policyholders not renewing their policies. The public, especially the middle class, has been severely impacted by this,” Mr O'Brien noted.

He mentioned that his party, the All India Trinamool Party first raised this issue on the floor of Parliament on July 29. Eventually, the matter was raised in both the Houses by MPs of 20 Opposition parties.

Mr O'Brien stated that on 2 August, the Chief Minister of West Bengal, Mamata Banerjee, wrote a letter to roll back the GST policy on health and insurance premiums. further, 350 MPs from 20 political parties protested against this in Parliament on 6 August, he said.

Nitin Nadkari too

Previously, Union Minister of Road Transport and Highways, Nitin Gadkari in a letter to Finance Minister Nirmala Sitharaman urged to remove the 18 percent GST on life and medical insurance premiums as it leads to levying taxes on the uncertainties of life and restricts the sector’s growth, according to a Mint report on July 31.

Derek O’Brien further referred to the 66th report of the Standing Committee on Finance, which stated, “ The Committee with a view to making insurance more affordable, recommend that GST rates applicable to health insurance products, particularly retail policies for senior citizens and microinsurance policies (up to limits prescribed under PMJAY), and term policies may be reduced.”

“The Insurance Regulatory and Development Authority of India has set the target of “Insurance for All” by 2047. The only way to achieve this is by repealing the exorbitant 18% GST rate on health and life insurance,” Mr O'Brien noted in his letter to the Finance Minister. 

                                                     (By arrangement with livemint.com)