‘18% GST on health, life insurance is a burden on 45 crore Indians’: Derek O’Brien pens Nirmala Sitharaman

TMC leader and Rajya Sabha MP Derek O'Brien requested Finance Minister Nirmala Sitharaman to withdraw the GST on health and life insurance premiums at the upcoming GST council meeting scheduled on September 9.

 In his letter to Nirmala Sitharaman on August 24, Derek O’Brien asked FM to remove the 18% GST currently applicable to health and life insurance premiums.

“The 18% Goods and Services tax (GST) on health and insurance premiums is a burden on 45 crore Indians comprising the middle class. These insurance schemes provide financial security during times of illness, may it be an illness, accident or untimely death. It is our collective responsibility to ensure that all sections of the society are able to afford this crucial social security net,” he wrote.

Derek O’Brien raised his concern that such a high GST rate will not allow people to opt for such social security policies and the existing users may even opt out of it.

“Levying a high GST rate on health and life insurance may lead to many citizens not opting for insurance schemes, or even existing policy holders not renewing their policies. The public at large, and especially the middle class, has been severely impacted by this,” Brien noted.

He mentioned that his party, the All India Trinamool Party first raised this issue on the floor of Parliament on July 29 and eventually the matter was raised in both the Houses by MPs of 20 Opposition parties.

Brien stated that on 2 August, the Chief Minister of West Bengal, Mamata Banerjee, wrote a letter to roll back the GST policy on health and insurance premiums.

Additionally, 350 MPs from 20 political parties protested against this in Parliament on 6 August, he said.

Previously, Union Minister of Road Transport and Highways, Nitin Gadkari in a letter to Finance Minister Nirmala Sitharaman urged to remove the 18 per cent GST on life and medical insurance premiums as it leads to levying taxes on the uncertainties of life and restricts the sector’s growth, according to a Mint report on July 31.

Derek O’Brien further referred to the 66th report of the Standing Committee on Finance, which stated, “ The Committee with a view to make insurance more affordable, recommend that GST rates applicable to health insurance products, particularly retail policies for senior citizens and microinsurance policies (up to limits prescribed under PMJAY), and term policies may be reduced.”

While concluding his letter he requested the government to take a look at the issue and reminded them of the goal of the Insurance Regulatory and Development Authority of India (IRDAI), the apex body for insurance regulation.

“The Union government must take cognizance of all these. The Insurance Regulatory and Development Authority of India has set the target of “Insurance for All” by 2047. The only way to achieve this is by repealing the exorbitant 18% GST rate on health and life insurance,” he wrote.