POLITICS

Get states to propose removal of GST on insurance premiums: Sitharaman to INDIA bloc MPs

Finance ministers of states ruled by the Opposition should make recommendations to the GST Council, Union finance minister says

INDIA bloc MPs demand withdrawal of GST on insurance premiums (photo: PTI)
INDIA bloc MPs demand withdrawal of GST on insurance premiums (photo: PTI) Atul Yadav

Union finance minister Nirmala Sitharaman on Wednesday asked the Opposition to convince their states to propose removal of 18 per cent GST (goods and services tax) levied on life and health insurance premiums at the GST Council.

Those who are demanding removal of 18 per cent GST on premiums on life and medical insurance should first convince their finance ministers in their respective states on this matter, she said, replying to the debate on the Finance Bill (No. 2), 2024, in the Lok Sabha.

The finance ministers of states ruled by the Opposition should have the heart to take a call on the removal of 18 per cent GST and make recommendations at the council meeting, she said.

Tax was being levied on medical insurance premiums prior to the GST rollout, she said, adding that this tax was subsumed into GST. The finance ministers of Congress, TMC, AAP and Left-ruled states should come up with proposals at the GST Council rather than protesting outside Parliament, she said.

"Have you consulted your states for removal...have you written to your state finance ministers, but here you are protesting against GST... what is this drama?" she quipped.

Interestingly, Sitharaman's own party colleague and fellow Union minister Nitin Gadkari also earlier appealed to her to roll back the tax.

On Tuesday, INDIA bloc parties staged a protest at the Parliament premises to press for the rollback of 18 per cent GST on life and health insurance premiums. MPs from parties such as the TMC (Trinamool Congress), Congress, and AAP (Aam Aadmi Party), among others, participated in the protest on the steps leading to the Makar Dwar of Parliament.

Carrying placards reading 'tax terrorism', the protesting MPs raised slogans demanding that the GST on life and health insurance premiums be rolled back.

Later, in a post in Hindi on X, Congress president Mallikarjun Kharge said, "Today in the Parliament premises, INDIA parties demanded immediate removal of 18% GST on health and life insurance premiums as this extortion is a severe blow to our people, especially the middle class.

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"The middle class is already struggling under the burden of the Modi government's tax collection policies. India's medical inflation rate is the highest in Asia in 2024 - at 14%! On top of that, this 'Gabbar Singh Tax' on life insurance and health insurance is inhuman, and another condemnable example of BJP's policy of plundering from 'opportunity in disaster'," Kharge said.

In a post in Hindi on X, Congress MP Rahul Gandhi said, "The Modi government even collected Rs 24,000 crore from millions of common Indians who pay health insurance premiums every year by saving every penny to ensure that they do not have to bow down to anyone in case of a 'health crisis' in life.

"Looking for a 'tax opportunity' in every disaster is proof of the insensitive thinking of the BJP government. INDIA Alliance opposes this opportunistic thinking. Health and life insurance must be made GST-free."

Senior Congress MP Shashi Tharoor said the INDIA bloc parties' protest against the imposition of 18 per cent GST on life and medical insurance premiums is absolutely justified.

"India is already the country whose citizens pay the highest out-of-pocket expenses for health crises in the world. Senior citizens who have taken health insurance are now paying the highest GST rates in the world. How does the government intend to attain the goal of 'insurance for all by 2047', when it is instead ensuring the unaffordability of insurance to most?" Tharoor wrote said on X.

TMC MPs have also raised the issue in Parliament and party president and West Bengal Chief Minister Mamata Banerjee has written to Union Finance Minister Nirmala Sitharaman on the matter.

Union minister Nitin Gadkari also wrote to Sitharaman and urged her to consider withdrawing the GST which, he said, amounted to taxing uncertainties of life and restricting the industry's growth.

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The issue came up in three GST Council meetings — the 31st , 37th and 47th. About 73-74 per cent of GST collected under the head goes to states, and they should have the heart to forgo this, Sitharaman said in the Lok Sabha.

Of the total GST collections of Rs 24,529 crore from health insurance in the last three years, she said, Rs 12,264 crore went straight to the states as SGST. It doesn't even come to the Centre. Apart from this, roughly 41 per cent of the Centre's share of GST collection on health insurance is devolved back to the states again as part of tax devolution as per the Finance Commission's formula, she said.

"The issue of removal of 18 per cent GST can be decided by the GST Council. Bringing an amendment here will not serve any purpose. First the GST council will decide, then only an amendment can be brought here," she said.

Commenting on the walkout staged by the Opposition on the issue of the speaker not considering an amendment moved by N.K. Premachandran (RSP) on the removal of GST, she said Parliament is not the right forum for this. "The Opposition tried to get a GST amendment through the Finance Bill. How can Parliament consider any subject which has not been approved by the GST Council?" she said.

Premachandran, a senior member, was not rightly informed about the issue of GST, which is why the Speaker did not take up the amendment moved by him, she claimed.

"Everything was going on smoothly, but MP N.K. Premachandran alleged that his request for an amendment was not considered by the Speaker. He wanted an amendment in GST via the Finance Bill. I think the MP was not rightly informed. The Speaker did not consider it because it can only be considered by the GST Council," she said.

Expressing regret about the walkout during the discussion and passage of the Finance Bill, she said, it was disappointing that the Opposition did not contribute to the passage of the Finance Bill.

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