Cabinet minister Nitin Gadkari’s letter to Union Minister of Finance Nirmala Sitharaman asking her to withdraw the 18% goods and services tax levied on life and medical insurance premiums is a “sure sign of internal dissent and rumblings” within the Bharatiya Janata Party, Congress leader Jairam Ramesh said on Wednesday.
In a letter dated July 28, Gadkari said he was flagging the concerns of the Nagpur Division Life Insurance Corporation Employees Union who had submitted a memorandum to him.
Gadkari, who is the Union minister of Road Transport and Highways, represents the Nagpur constituency in the Lok Sabha. His letter to Sitharaman came days after she presented the Union Budget in Parliament.
“Levying GST [goods and services tax] on life insurance premiums amounts to levying tax on the uncertainties of life,” Gadkari said. “The union feels that the person who covers the risk of life’s uncertainties to give protection to the family should not be levied tax on the premiums to purchase cover against this risk.”
He also said that the 18% goods and services tax on medical insurance premiums is proving to be a “deterrent for the growth of this segment of business which is socially necessary”.
Additionally, Gadkari said that the union had also raised with him concerns regarding the differential treatment of savings through life insurance, the re-introduction of income tax deduction for health insurance premiums, and the consolidation of public sector general insurance companies.
On Wednesday, Congress MP Karti Chidambaram said that he is happy that Gadkari “endorsed his demand” which he made in the Lok Sabha.
“We are a very underinsured country and we must encourage people to insure themselves,” Chidambaram told PTI. “By levying GST [goods and services tax], premiums become expensive. You must treat insurance not only as a social cover but also as a mode of saving.”