TMC leader Derek O’Brien has called on Finance Minister Nirmala Sitharaman to urgently review and eliminate the 18% GST on health and life insurance premiums at the upcoming GST Council meeting.
In a letter dated August 24, O’Brien requested the withdrawal of this GST at the 54th GST Council meeting, arguing that the 18% tax is a heavy burden on 45 crore middle-class Indians. He emphasised that health and life insurance schemes offer essential financial protection during crises like illness, accidents, or untimely deaths, and stressed the importance of making these safety nets affordable for all sections of society.
O’Brien expressed concern that the high GST rate might discourage many citizens from purchasing insurance or renewing existing policies, particularly impacting the middle class. He noted that TMC and several other opposition parties had already raised this issue in Parliament. Additionally, West Bengal Chief Minister Mamata Banerjee had previously written to the Finance Minister, urging the rollback of the GST on insurance premiums.
O’Brien also referenced a letter from Union Road Transport and Highways Minister Nitin Gadkari, who raised concerns on behalf of the Nagpur Division Life Insurance Corporation Employees’ Union. O’Brien mentioned that 350 MPs from 20 political parties protested this issue in Parliament on 6 August , and highlighted that the Standing Committee on Finance recommended reducing GST rates on health insurance products, especially for senior citizens and microinsurance policies, in its 66th report to Parliament in February 2024.
O’Brien urged the Union government to consider these recommendations, pointing out that the Insurance Regulatory and Development Authority of India aims for ‘Insurance for All’ by 2047, a goal that could only be achieved by eliminating the 18% GST rate on health and life insurance.
He also noted that the Union government holds one-third of the votes in the GST Council, and with the NDA in power in 22 states, any proposal the Union rejects is effectively dead. O’Brien questioned what was preventing the ruling party from implementing this change and called for an urgent review of the matter at the 54th GST Council meeting on 9 September 2024, based on media reports.
The demand for removing GST on health and life insurance premiums has been raised by several opposition parties in the Lok Sabha. RSP MP NK Premachandran even proposed an amendment to eliminate the 18% GST on medical and life insurance premiums during the passage of the Finance Bill, but the amendment was not considered, leading to a walkout by several opposition parties. Sitharaman had responded that any changes to GST must be approved by the GST Council.
Vakilsearch experts emphasise the critical role that tax policy plays in shaping the accessibility and affordability of essential services like health and life insurance. The ongoing debate over the 18% GST on insurance premiums highlights the need for balanced taxation that supports public welfare while ensuring revenue generation. Vakilsearch offers expert legal services to help clients navigate these complex regulatory landscapes. Our team of seasoned legal professionals is adept at providing comprehensive advice on tax matters, assisting with compliance issues, and advocating for favorable policy changes.
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