Growing Demand for Reduction of GST on Health and Life Insurance
Amid increasing pressure from various quarters to lower or eliminate the Goods and Services Tax (GST) on health and life insurance, the government has revealed that the tax generated a substantial Rs 21,256 crore over the last three fiscal years, with Rs 8,263 crore collected in 2023-24.
In response to a query in Parliament, Pankaj Chaudhary, junior finance minister, disclosed that an additional Rs 3,274 crore was garnered from GST on the reissuance of health policies during the same period. Established at 18% when the new regime commenced in July 2017, the GST Council mandates a 9% collection by the Centre, matched by states. Furthermore, 41% of the Centre’s collection is shared with the states according to the devolution formula.
Chaudhary acknowledged industry representations seeking exemptions or reduced GST rates on life insurance and health insurance, highlighting that these decisions fall under the purview of the GST Council, a constitutional body comprising representatives from both the Centre and the States/Union Territories.
While certain insurance schemes tailored for underprivileged segments and differently abled individuals, such as the Rashtriya Swasthya Bima Yojana, Universal Health Insurance Scheme, Jan Arogya Bima Policy, and Niramaya Health Insurance Scheme, are exempt from GST, the clamor for a complete waiver of the tax has gained momentum. Nitin Gadkari’s proposal to eliminate GST on health and life products has been met with support, with political figures from Bengal also advocating for the levy’s removal.
TMC MP Derek O’Brien emphasized the significance of reducing the 18% GST on medical and health insurance, particularly for the middle class. He expressed that this reduction is vital to alleviate the burden on the people. “The demand is straightforward. Reduce 18% GST on medical and health insurance. We should reduce it because this is an issue which is burdening people, mainly middle class. That is why this needs to be reduced,” he articulated during Monday’s zero hour.
The escalating call for a reduction in GST on health and life insurance reflects a broader concern for alleviating financial strain on the public, with the debate poised to continue as stakeholders seek a resolution to this pressing issue.
