In a strong appeal to Union Finance Minister Nirmala Sitharaman, Union Minister of Road Transport and Highways Nitin Gadkari has called for the removal of the 18 per cent GST on life and medical insurance premiums. In his letter, Gadkari highlighted a memorandum from the Nagpur Divisional Life Insurance Corporation Employees Union, which argues that taxing life and medical insurance premiums equates to taxing life’s uncertainties.
Gadkari pointed out that the 18 per cent GST on medical insurance premiums is hindering the growth of an essential sector. He also stressed that this tax burden is particularly challenging for senior citizens, making it cumbersome for them to manage their finances under current rules.
The Union also raised other pressing issues in their communication with Gadkari, including differential treatment of life insurance savings, the reintroduction of IT deductions for health insurance premiums, and the consolidation of public sector general insurance companies.
This isn’t the first plea to Sitharaman regarding GST on health insurance. In June, the Confederation of General Insurance Agents’ Associations of India requested a reduction of GST on individual health policies from 18 per cent to 5 per cent. They argued that such a move would encourage more people to purchase these policies as a form of social security, especially as health insurance premiums have nearly doubled over the last five years.
Despite the increased premiums, the number of policies issued and lives covered remains low, with policy renewal rates continuing to decline due to frequent hikes in premiums and rising medical inflation. The association noted that only 65-75 per cent of retail health insurance policies are renewed annually, indicating that many policyholders struggle to afford the rising costs.
Gadkari’s letter emphasised the need for urgent consideration of these issues to alleviate the financial burden on citizens and promote the growth of the insurance sector.
