NEW DELHI: Union road transport and highways minister Nitin Gadkari has urged finance minister Nirmala Sitharaman to consider suggestions for removing GST on life and health insurance, a demand that is unlikely to be met, although it has generated tremendous interest.
While forwarding a representation from the Nagpur Divisional Life Insurance Corporation Employees Union, the minister, a three-term Lok Sabha MP from the constituency, said: “Levying GST on life insurance premium amounts to levying tax on uncertainties of life…Similarly, the 18% GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business, which is socially necessary.”
Citing other demands in the memorandum, he went on to say: “The union feels that a person who covers the risk of life’s uncertainties to give protection to the family should not be levied tax on the premium to purchase cover against the risk… you are requested to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for senior citizens as per rules with due verification…”
Insurance was one of the biggest contributors to service tax kitty, which was subsumed into GST from July 2017. While Centre levied 15% service tax, GST Council, the all-powerful ministerial panel chaired by finance minister, settled for 18% tax on insurance, which is seen to be burdensome by consumers. Several other services, such as telecom, attract the same levy.
In all likelihood, the rationalisation rates, and possible merger of slabs, will see a reduction in levy although a removal of tax will result in those providing services to insurance firms being denied tax credits.
A final call on the change in rates will only be taken up once a group of ministers led by Bihar deputy chief minister Samrat Chaudhary submits its report to the GST Council. After the last meeting of the GST council, Sitharaman had said that preliminary discussions may take place when ministers reassemble in Aug. Congress MP Karti Chidambaram latched on to Gadkari’s communication, claiming that he’d made a similar demand earlier.
The letter from Gadkari, however, has come as a surprise, although he is seen to have forwarded a representation that was made to him.
While forwarding a representation from the Nagpur Divisional Life Insurance Corporation Employees Union, the minister, a three-term Lok Sabha MP from the constituency, said: “Levying GST on life insurance premium amounts to levying tax on uncertainties of life…Similarly, the 18% GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business, which is socially necessary.”
Citing other demands in the memorandum, he went on to say: “The union feels that a person who covers the risk of life’s uncertainties to give protection to the family should not be levied tax on the premium to purchase cover against the risk… you are requested to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for senior citizens as per rules with due verification…”
Insurance was one of the biggest contributors to service tax kitty, which was subsumed into GST from July 2017. While Centre levied 15% service tax, GST Council, the all-powerful ministerial panel chaired by finance minister, settled for 18% tax on insurance, which is seen to be burdensome by consumers. Several other services, such as telecom, attract the same levy.
In all likelihood, the rationalisation rates, and possible merger of slabs, will see a reduction in levy although a removal of tax will result in those providing services to insurance firms being denied tax credits.
A final call on the change in rates will only be taken up once a group of ministers led by Bihar deputy chief minister Samrat Chaudhary submits its report to the GST Council. After the last meeting of the GST council, Sitharaman had said that preliminary discussions may take place when ministers reassemble in Aug. Congress MP Karti Chidambaram latched on to Gadkari’s communication, claiming that he’d made a similar demand earlier.
The letter from Gadkari, however, has come as a surprise, although he is seen to have forwarded a representation that was made to him.
