After Surface Transport Minister Nitin Gadkari raised the issue of GST on insurance products, West Bengal Chief Minister Mamata Banerjee and her Party Trinamool Congress (TMC) on Friday pressed the demand for removal of GST on such financial products.
As on date, premium on various life insurance products ranges between 1.8 and 18 per cent, while on general insurance products such as health and car insurance, it is flat 18 per cent.
In a letter to Finance Minister Nirmala Sitharaman, Banerjee said: “I request you to kindly review the anti-people taxation policies and withdraw the GST on life insurance and health insurance premiums and include deduction under sections 80C and 80D of the Income Tax Act on such premium in the new tax regime.” Further, she added that such a move will facilitate wider insurance coverage for the common people with more mental and financial stability.
Financial burden
She argued that imposition of GST on insurance premiums increases the financial burden on the common people. “This additional burden may be acting as deterrent for many individuals from taking new policies or continuing their existing insurance coverage, thereby leaving them vulnerable to unforeseen financial distress,” she said. Moreover, insurance serves as a vital component of the social safety net, reducing the government’s burden in providing direct financial assistance to citizens during such emergency, she added.
Earlier in the day, TMC MP Sudip Bandyopadhyay raised this issue in Lok Sabha, saying taxing insurance premium is “anti-people”. The government must withdraw it, the Kolkata Uttar MP said and the demand was backed members of the opposition INDIA bloc parties in the Lower House of Parliament. “The 18 per cent GST charged over life insurance premiums and medical insurance should be withdrawn. This GST is anti-people, it is adversely affecting the people of India,” Bandyopadhyay said while demanding for roll back MPs from INDIA bloc parties TMC and DMK walked out of the House, alleging that there was no clarification from the government over the issue.
Earlier this week, Surface Transport Minister Nitin Gadkari had written to Finance Minister Nirmala Sitharaman to withdraw GST on life and medical insurance premiums. In a letter to the Finance Minister, Gadkari said, the Nagpur Divisional Life Insurance Corporation Employees Union has submitted a memorandum to him on the issues pertaining to the insurance industry. The main issue raised by the Union was related to the withdrawal of GST on life and medical insurance premium.
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. Similarly, the 18 per cent GST on medical insurance premiums is proving to be a deterrent for the growth of this segment of business, which is socially necessary, said Gadkari.
Any change or withdrawal of GST on a good or service can be recommended by GST Council following which Centre and State Governments issue notifications. It is believed that this issue will also be taken by the Group of State Ministers assigned to suggest ways for GST rate rationalisation.