GST Council meet: TMC’s O’Brien urges Sitharaman to withdraw 18 pc GST on insurance premiums
New Delhi, August 25
TMC leader Derek O’Brien has urged Finance Minister Nirmala Sitharaman to “urgently review” and withdraw the 18 per cent GST on health and life insurance premiums during the upcoming GST Council meeting.
O’Brien, in a letter dated August 24, demanded that the GST on health and life insurance premiums be withdrawn at the 54th meeting of the GST Council.
“The 18 per cent Goods and Services Tax (GST) on health and life insurance premiums is a burden on 45 crore Indians comprising the middle-class,” said O’Brien, the Trinamool Congress’ (TMC) leader in the Rajya Sabha.
“These insurance schemes provide financial security during times of distress, may it be an illness, accident, or untimely death. It is our collective responsibility to ensure that all sections of society are able to afford this crucial social safety net,” he said.
O’Brien also expressed fear that levying a high GST rate on health and life insurance might lead to many citizens not opting for insurance schemes or even existing policyholders not renewing their policies.
“The public at large, and especially the middle-class, has been severely impacted by this,” he said.
He pointed out that while the issue was raised by the TMC and several other Opposition parties in Parliament, West Bengal Chief Minister Mamata Banerjee wrote to the finance minister earlier this month and requested that the GST on insurance premiums be rolled back.
O’Brien also referred to a letter by Union Road Transport and Highways Minister Nitin Gadkari raising concerns of the Nagpur Division Life Insurance Corporation Employees’ Union, which had submitted to him a memorandum on the industry’s issues.
The TMC leader said “350 MPs from 20 political parties protested against this in Parliament on August 6”.
“The Union minister of road transport and highways also wrote to you on this issue,” O’Brien said.
“Reducing GST rates has also been endorsed by the Standing Committee on Finance in its 66th report submitted to Parliament in February 2024,” he added.
The committee in its report recommended that GST rates applicable on health insurance products, particularly retail policies for senior citizens and microinsurance policies (up to limits prescribed under the Pradhan Mantri Jan Arogya Yojana), and term policies might be reduced to make insurance more affordable.
“The Union government must take cognisance 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 per cent GST rate on health and life insurance,” O’Brien said.
The Union government has one-third weightage of votes in the GST Council, he noted.
“To pass any resolution, three-fourths ie 75 per cent of votes are needed. Moreover, the NDA is in government in 22 states. So practically, if the Union rejects any proposal, it is essentially dead. What is holding the ruling dispensation back from implementing this through the GST Council?” asked O’Brien.
“Therefore, I request you to urgently review this matter at the 54th meeting of the GST Council on September 9, 2024 (as per media reports), and withdraw the 18 per cent GST on health and life insurance premiums,” he added.
The demand for withdrawing GST on life and health insurance premiums was raised by several Opposition parties in the Lok Sabha.
RSP MP NK Premachandran had also moved an amendment seeking removal of the 18 per cent GST on medical and life insurance premiums when the Finance Bill was being passed. The amendment was not taken up, leading to several opposition parties staging a walkout from the Lower House.
Sitharaman, who piloted the Finance Bill, had said any amendment in the GST had to be approved by the GST Council.
