Road and Transport Minister Nitin Gadkari has called on Finance Minister Nirmala Sitharaman to eliminate the Goods and Services Tax (GST) on life and medical insurance premiums. Gadkari’s appeal comes in response to a memorandum submitted by the Nagpur Divisional Life Insurance Corporation Employees Union, highlighting the challenges faced by the industry, according to a report by Moneycontrol.

Currently, life and medical insurance premiums are subject to an 18 percent GST. Gadkari argued that this tax impedes the growth of these vital sectors, especially affecting senior citizens. “You are requested to consider the suggestion of withdrawal of GST on life and medical insurance premium on priority as it becomes cumbersome for the senior citizens,” Gadkari stated in his letter dated July 28.

Gadkari emphasized that taxing life insurance premiums is akin to taxing life’s uncertainties, asserting that the removal of GST on these premiums would be beneficial for policyholders. “Similarly, the 18 percent GST on medical insurance premium is proving to be a deterrent for the growth of this segment of business which is socially necessary,” he added.

The life, general, and health insurance industries have been advocating for a reduction in GST on life and medical insurance premiums to 12%. However, Gadkari’s proposal seeks the complete abolition of GST in these sectors, a more ambitious step.

In his letter, Gadkari also expressed concerns about the unequal treatment of savings through life insurance, the potential reintroduction of Income Tax on health insurance premiums, and the consolidation of public sector general insurance companies.

The GST Council is scheduled to meet in August, with the most recent meeting held on June 22. It remains to be seen whether Gadkari’s recommendations will be considered in the upcoming discussions.