Finance Minister Nirmala SitharamanImage credit source: PTI
The issue of removing 18 per cent GST on life and health insurance premiums has now taken a political turn. It all started when Union Road Transport and Highways Minister Nitin Gadkari wrote a letter to the Finance Minister. Its echo was heard even in Parliament and now Finance Minister Nirmala Sitharaman has also made a big announcement on removing GST on insurance premiums.
Finance Minister Nirmala Sitharaman gave her response to the amendments introduced in the Finance Bill-2024 in Parliament on August 7. Meanwhile, she said that the issue of 18% GST on life and health insurance premiums will be raised in the GST Council meeting and a decision will be taken on the matter later.
The tax was levied even before GST.
During this, she also criticised the opposition for politicising this issue. Finance Minister Nirmala Sitharaman said that even before the implementation of GST, taxes were levied on health insurance. This was applicable in all states. Have the parties who are making this an issue today discussed removing this tax in the states under their governments?
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Rs 24,000 crore GST gain on insurance
Industry experts say that charging GST at the rate of 18% on life and health insurance premiums actually discourages people from taking insurance. One of the main reasons for this is that most people get the benefit of financial products like insurance only in case of hospitalisation or death. In such a situation, the high rate of GST on premiums disappoints common people.
The government has raised revenues of over Rs 24,000 crore in the last 3 financial years by collecting GST on life and health insurance premiums. On this, the Finance Minister claims that around 74 per cent of the money collected from GST goes to the states.
He said that many suggestions have been received regarding the removal of GST from insurance. The decision on this will be taken by the GST Council. States have two-thirds share in the GST Council. The GST Council is capable of taking such decisions.
