Mamata Banerjee Urges Central Govt to Remove GST on Insurance Premiums

She emphasized that the 18% GST rate on insurance premiums is counterproductive and harms the financial well-being of ordinary citizens.

West Bengal CM Mamata Banerjee has called on the central government to withdraw the Goods and Services Tax (GST) on life insurance and health insurance premiums, labeling the taxation as "anti-people."

In a letter to Union Finance Minister Nirmala Sitharaman dated August 2, Banerjee argued that GST on these essential items increases the financial burden on the common people.

Life and medical insurance premiums currently attract an 18% GST rate.

Banerjee expressed concern that this additional financial burden might deter individuals from taking new policies or continuing existing coverage, potentially leaving them vulnerable to unforeseen financial distress.

She emphasized that the 18% GST rate on insurance premiums is counterproductive and harms the financial well-being of ordinary citizens.

In addition to her plea regarding GST, Banerjee urged the central government to make provisions for standard deductions under sections 80C and 80D of the Income Tax Act applicable under the new tax regime.

The standard deduction is presently available only under the old tax regime.According to the Bengal CM, these deductions are essential for promoting financial security among individuals.

Banerjee also highlighted the critical role of life and health insurance in providing financial security during unexpected events such as illness, accidents, and untimely deaths.

"The primary objective of life and health insurance is to provide financial security and support during unexpected times," her letter stated.

She underscored that insurance policies are crucial in helping individuals and their families cope with financial hardships during challenging times.

Insurance as Social Safety Net

In her letter, the CM pointed out that insurance serves as a vital component of the social safety net, reducing the government's burden of providing direct financial assistance during health emergencies.

"We all know that health is wealth. Healthcare is a major social security, and it is our commitment to extend maximum social security in this area to ensure the good health and well-being of the common people," she added.

Her letter concluded with a strong appeal to reconsider the taxation policies on insurance premiums to support the financial well-being of citizens and promote broader social security.

In a similar development, just days back, Road and Transport Minister Nitin Gadkari wrote to Finance Minister Nirmala Sitharaman, urging the removal of the 18% Goods and Services Tax (GST) on life and medical insurance premiums.

The letter was in response to a memorandum submitted by the Nagpur Divisional Life Insurance Corporation Employees Union, which highlighted the challenges faced by the industry due to the current tax regime.

In his letter, Gadkari emphasized that taxing life insurance premiums is akin to taxing life’s uncertainties, which is counterproductive.