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Union Road Transport and Highways Minister Nitin Gadkari has written to Finance Minister Nirmala Sitharaman, advocating for the withdrawal of the 18% Goods and Services Tax (GST) on life and medical insurance premiums. He believes this move would provide significant impetus to the insurance sector, contributing to a surge in policy issuance and bolstering financial stability for individuals and families.
Gadkari argues that the current GST structure on insurance premiums creates a deterrent for individuals seeking financial protection. The presence of GST adds an extra financial burden, potentially discouraging people from investing in essential life and medical insurance policies. He stresses that the insurance sector plays a crucial role in providing financial security, particularly during unforeseen circumstances such as illness, accidents, or death. By eliminating the GST on premiums, the government could incentivize a greater participation in insurance, ultimately leading to a more resilient and financially secure population.
The insurance industry has long been advocating for the removal of GST on premiums, citing its detrimental impact on growth and affordability. They argue that the tax adds an unnecessary cost to insurance policies, making them less attractive to potential customers. The industry believes that a GST-free regime would lead to an increase in insurance penetration, benefiting both individuals and the economy. Furthermore, they highlight that the removal of GST would align with the government's objective of promoting financial inclusion and ensuring widespread access to insurance.
Source: Withdraw 18% GST on life and medical insurance premium: Gadkari writes to FM Sitharaman