The opposition had been demanding that the GST on health and life insurance premiums be scrapped but Union Finance Minister Nirmala Sitharaman has rebuffed such calls. Briefing journalists at the Parliament House Complex on Wednesday, Sitharaman underlined that "this is not an amendment which we [the government] will be able to introduce in Parliament" and laid out several aspects related to present tax system.
Protests by Opposition
On Tuesday, Members of the INDIA bloc protested at gate of Parliament premises demanding scrapping of 18 percent GST on life and health insurance premium. The protest came in response to an appeal made by Union Minister Nitin Gadkari, who had asked Sitharaman to remove the GST from these premiums. Opposition MPs, including Raghav Chadha of Aap and N K Premchandran from the RSP argued that tax on insurance premiums needed to be reduced.
Finance Minister Rebuttal
In a response posted on Twitter later, Sitharaman said, "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."
She went on to clear all the confusion around Centre's earnings through health insurance premiums saying,
"Wrongful protests have happened recently, and comments have been passed on the basis of a news report which suggested that the 'Centre has pocketed Rs. 24,529 crores of health insurance premiums alone'. This is incorrect and highly misleading.
The GST rate of 18% on Health Insurance comprises of 9% CGST and 9% SGST.
Thus, of the total collections of Rs 24,529 crores from Health Insurance in the last 3 years, Half of it, Rs. 12,264 crores, went straight to the states as SGST. It doesn't even come to the Centre.
Apart from this, roughly 41% 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."
Pointing out the constitutional mandate of GST council, Sitharaman said if any issue comes related to GST it should be dealt with by the GST council adding that any decision regarding GST are discussed in the Council, which has representatives from all states and union territories.
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