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This is one pinch we all feel every time we pay the premium for our life and health insurance policies. The prohibitive 18% Goods and Services Tax (GST) adds to the high premium that insurers are charging. In a country like India, where insurance penetration is low, the high tax rate discourages people from getting insured or opting for higher cover.
This over-taxing of the people comes even as the government has been raking in higher GST collections month after month.
It was Union Road Transport and Highways Minister Nitin Gadkari who recently stirred the hornet’s nest by seeking the elimination of the 18% GST on life and health insurance premiums.
In a letter to Finance Minister Nirmala Sitharaman, Gadkari said taxing these premiums equates to “taxing life’s uncertainties” and hinders the growth of the insurance sector.
In a country where there is no social security net and government medical infrastructure is rickety, the high 18% GST on life and health insurance premiums defies logic.
The GST regime came into effect on July 1, 2017. For years now, the GST Council has been talking about reviewing the rates, but has not made any move towards it, despite the high collections.
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