Taxes were imposed on health insurance even before GST regime, Sitharaman informs Lok Sabha

New Delhi [India], August 7 : Speaking on the suggestions by many Opposition members to reduce GST on health insurance premiums, Finance Minister Nirmala Sitharaman on Wednesday hit back at them stating that taxes were imposed on such items even before the GST regime came into effect in 2017.
Instead, she suggested the members to write or take it up to discuss with their respective state's finance minister, so they can subsequently take the matter to the GST Council. States form two-thirds of the GST Council, which is a constitutional body.
Both life insurance and medical insurance premiums attract a GST rate of 18 per cent.
"A lot of members have given us suggestions on GST (on insurance premiums), which certainly I will take to the council, because the ultimate decision is in the council, where states together are two-thirds of the representatives, one-third is all the central government has," she said, speaking during the discussion on Finance Bill 2024-15, which was passed today.
"Tax has been there on medical insurance even before GST was introduced. There was already a Service Tax on medical insurance, before the GST was introduced. This is not a new tax, it was already there in all the states. Those protesting here, did they discuss regarding the removal of this tax in their states? Did they write to the Finance Ministers of their respective states about it and asked them to raise it in the GST Council where states have 2/3rd part? No, but they are protesting here. This is their double standards, this is their drama."
Recently, many leaders from Opposition ruled states have requested Finance Minister Sitharaman to reduce GST on insurance premiums. West Bengal Chief Minister Mamata Banerjee has requested the central government to withdraw the Goods and Services Tax (GST) on life insurance and health insurance premiums, terming the taxation on such items as "anti-people."
Union Minister Nitin Gadkari also wrote a letter to the finance minister seeking a reduction on GST on such essential items.
"A letter was written by the Honorable Minister to me. A letter is written by a minister. But because that letter came to the public through someone else, it was open. (People might have thought that) there is a lot of difference of opinion in the government," she informed the parliament as she went on to explain the matter.
"Have you written a letter to the GST Ministers who sit in the GST Council? No. Why? Have you written a letter to the GST Ministers from the states that take up two-thirds of the representation? No. What kind of double drama is this? What kind of drama is this?," she targeted the Opposition members.
She also informed the Lok Sabha that the matter (GST on insurance premiums) was discussed in the 31st and 37th and 47th meetings of the GST Council.
Further, citing a newspaper report, which headlined central government pocketed Rs 24,529 crores on health insurance premium, she deemed it, "Absolutely wrong statement. Totally wrong."
If GST is 18 per cent on some item, here it is health insurance premium, 9 per cent goes to the state and the rest 9 per cent comes to the central government.
"And in this matter (the newspaper report), Rs 12,264 crores immediately on collection goes to the state. Rs 24,529, which was written wrong, that it has been pocketed by the centre."
Of the central government's portion, another 41 per cent goes to the states. So, in total, approximately 73-74 per cent the GST collected on health insurance premium goes to the states.
"That means, you collect 100 rupees GST, 50 rupees goes to the state immediately, and Another 50 rupees, which comes to me, out of that, the 50 per cent that comes to me, 50 rupees, out of that, 29 rupees and 50 paisa, goes to the state. Meaning, 74 rupees and some money, out of every 100 rupees, 74 rupees goes to the state."
Against that context, she again asked the members to write to their respective state's finance minister so that they could take it up in the GST Council meeting.
The INDIA alliance leaders held a protest against the Central government outside the Parliament on Tuesday, demanding to roll back GST on health and life insurance products. Congress leader Rahul Gandhi also joined the protest.