Added tax discourages people from availing policies for protection, non-life insurance for households to cover the risks of hospitalisation and accidents needs to be pushed and encouraged by the govt to gradually ensure social security for citizens
NEW DELHI: The Confederation of General Insurance Agents’ Associations of India, an umbrella body of non-life insurance agents, on Tuesday urged the government to withdraw the 18% GST on individual health insurance policies so that more people are encouraged to avail these as a measure of social security.
The confederation submitted a memorandum to Finance Minister Nirmala Sitharaman with a copy to the GST Council and also to the Parliamentary Standing Committee on Finance. In the memorandum, the confederation has pointed out that it is an anomaly that all insurance policies attract 18% GST.
There should have been a differentiation between policies on commercial lines (availed by industry, commerce) and policies on personal lines, availed by individuals. The premium paid for policies catering to industry and commerce gets the input tax credit. But for individuals who avail health, personal accident, household security (fire, theft etc) policies, the premium paid and the high rate of GST at 18% is an expense that drains limited income.
“This discourages people from availing policies for protection. Non-Life insurance for households to cover the risks of hospitalisation and accidents needs to be pushed and encouraged by the govt to gradually ensure social security for citizens by prompting individuals to think of risk transfer to Insurance Companies at bearable, economic costs," a statement issued by the confederation said.
“Otherwise at times of natural calamities, accidents, disease, or pandemics like covid-19 even affordable sections of the society turn to the govt for economic assistance," it said.
There are nearly 11 lakh self-employed licensed non-life insurance agents in the country who play a major role in individually canvassing to sell such policies and therefore they vouch for the difficulty and opinion of individual customers on this matter.
“It is high time that the affordable section is encouraged by the government to avail insurance on their own for health, personal accident and home security. The onset of the current pandemic has proved the necessity of individuals having health insurance cover for family. Withdrawal of GST on personal line policies and other tax benefits will go a long way to encourage this trend," the statement said.