New Delhi: Union Finance Minister Nirmala Sitharaman clarified on Thursday that the release of Nitin Gadkari’s letter requesting the removal of 18% GST on health insurance premiums occurred without his consent. Speaking in the Rajya Sabha, Sitharaman criticized the Opposition for seizing on the issue, stating that the disclosure was unauthorized.
The Finance Minister also addressed the matter in the Lok Sabha, emphasizing that taxation on medical insurance predates the GST. “The tax on medical insurance existed before GST was introduced,” Sitharaman noted, questioning whether those protesting had previously addressed the tax issue in their respective states.
Gadkari’s letter to Sitharaman, sent on behalf of the Nagpur LIC union, advocated for the removal of GST on life and medical insurance premiums to alleviate the tax burden on insurers and potentially boost demand for these essential services. Gadkari argued that taxing insurance premiums effectively taxes the uncertainties of life.
Currently, insurance and pension fund assets in India account for 19% and 5% of GDP, respectively, compared to much higher figures in the USA and UK. Gadkari’s letter also highlighted concerns about the disparity in treatment of savings through life insurance, the need for reinstated income tax deductions for health insurance premiums, and the consolidation of public and private sector general insurance companies.
