Amidst Opposition from Union Cabinet Minister Nitin Gadkari, West Bengal Chief Minister Mamata Banerjee, and several MPs against the 18 per cent GST on health insurance premiums, the Government on Monday told Parliament that it collected Rs 8,263 crore from this tax in the 2023-24 fiscal year. Minister of State for Finance Pankaj Chaudhary noted that the 18 per cent GST rate on health insurance has been consistent since GST’s introduction and the Government has received representations requesting for exemption or reduction in the rate of GST on life insurance and health insurance.

Meanwhile, it is learnt that several Opposition parties are planning to stage a protest in the Parliament complex on Tuesday to press for the rollback of 18 per cent GST on life and health insurance premiums.

Replying to a written query on the GST in the Lok Sabha, Chaudhary said that certain insurance schemes catering to poor sections of the society and differently-abled, such as Rashtriya Swasthya Bima Yojana (RSBY), Universal Health Insurance Scheme, Jan Arogya Bima Policy and Niramaya Health Insurance Scheme are exempt from GST. In 2023-24, the GST collection from health insurance premium stood at  Rs  8,262.94 crore, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium. In the 2022-23 fiscal, Rs  7,638 crore GST was mopped up from health insurance premium, and another Rs  963 crore from health reinsurance premium. In the 2021-22 financial year, GST of Rs  5,354 crore was mobilised from health insurance premium, while Rs 826 crore came in from health reinsurance premium. 

In reply to a separate question, Chaudhary said, “After the introduction of GST with effect from July 1, 2017, GST is leviable on life insurance and health insurance services.”

To a question on whether there is a demand from the industry for withdrawal of service tax, Chaudhary said, “Representations have been received requesting for exemption or reduction in the rate of GST on life insurance and health insurance.”

GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising representatives from both the Centre and the States/UTs, he added.

In Rajya Sabha, senior TMC Leader Derek O’Brien had raised the issue, seeking reduction of 18 per cent GST on health insurance policies as high tax rate is burdening people, especially the middle class.

Raising the issue during Zero Hour in Rajya Sabha, he also referred to a letter written to the Finance Minister by senior BJP Leader and Union Minister Gadkari making similar demands. 

“The demand is straightforward. Reduce 18 per cent GST on medical and health insurance.

We should reduce it because this is an issue which is burdening people, mainly the middle class. That’s why it needs to be reduced,” said Derek.

Further, he said there is an imbalance in the insurance sector, where 75 per cent is life insurance policies, and 25 per cent medical insurance. Derek said the West Bengal chief minister has written to the finance minister in this regard and many Opposition MPs have also raised the issue. Derek also rejected the argument given by the Government that the GST Council can only change this. “This is a flawed argument,” he said, adding that the NDA has a majority in the council also.