Union Minister of Road Transport and Highways, Nitin Gadkari, has formally requested Finance Minister Nirmala Sitharaman to reconsider the 18% Goods and Services Tax (GST) imposed on life and medical insurance premiums. In his letter, Gadkari argues that this tax burdens both individuals and the insurance sector, particularly affecting senior citizens and stifling the growth of essential insurance services.
Gadkari’s letter highlights that the 18% GST on life and medical insurance premiums essentially taxes the uncertainties of life, placing an additional financial strain on those seeking coverage against such risks. He emphasizes that this tax is cumbersome for senior citizens and serves as a deterrent to the expansion of the medical insurance sector, which is crucial for social welfare. The minister also points out that the tax policy reflects differential treatment of savings through life insurance and calls for a reintroduction of income tax deductions for health insurance premiums. Additionally, Gadkari suggests consolidating public sector general insurance companies to address these issues more effectively. This plea for a tax reduction echoes earlier appeals from the Confederation of General Insurance Agents’ Associations of India, which also urged the government to lower GST rates on health insurance to enhance affordability and policy uptake.
Nitin Gadkari’s appeal to Finance Minister Nirmala Sitharaman underscores the broader concerns regarding the impact of high GST rates on life and medical insurance premiums. By urging the withdrawal of the 18% tax, Gadkari seeks to alleviate financial pressures on individuals, especially the elderly, and to foster growth in the insurance sector. This request is part of a larger conversation about making insurance more accessible and addressing financial barriers that hinder policy purchases and renewals. The outcome of this request could significantly influence the future of insurance taxation and its role in social security.
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