Union Finance Minister Nirmala Sitharaman on Wednesday dismissed objections to the 18 per cent Goods and Services Tax (GST) on life and medical insurance premiums, calling the opposition’s protest "drama" and "double standards."
Sitharaman asserted that critics should have consulted their state finance ministers, who are integral members of the GST Council.
Sitharaman addressed the Lok Sabha amid growing dissidence over the GST on premiums, emphasising that the tax is not new and was previously levied as a Service Tax before the introduction of GST.
"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," she said.
In her fiery speech, Sitharaman questioned the opposition’s sincerity, suggesting they failed to raise the issue with their state finance ministers who hold significant influence in the GST Council.
"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 retorted.
The controversy over the GST on insurance premiums was further fueled by internal dissent within the government. Nitin Gadkari, Union Minister for Road Transport and Highways, expressed his reservations in a letter to Sitharaman dated July 28. Gadkari relayed the concerns of the Life Insurance Corporation Employees Union in Nagpur, arguing that taxing insurance premiums amounts to "taxing the uncertainties of life."
Gadkari's letter also highlighted the negative impact of the 18 per cent GST on medical insurance premiums, describing it as a deterrent to the growth of a socially necessary business segment. He urged Sitharaman to reconsider and withdraw the GST on life and medical insurance premiums.
The opposition seized on this internal disagreement, with Congress leader Rahul Gandhi leading the charge. In a social media post, Gandhi accused the BJP of exploiting every crisis as a "tax opportunity," condemning the government's decision as evidence of its "insensitive thinking."
He claimed that the Modi government had unfairly extracted ₹24,000 crore from individuals striving to avoid financial ruin during health crises.
The GST on insurance premiums, announced in this year's budget, has been a lightning rod for criticism. Opposition parties have accused the Centre of favouritism towards Bihar and Andhra Pradesh, states governed by its allies TDP and JDU. Social media has been rife with complaints about the heavy tax burden on the salaried middle class.
Sitharaman dismissed these allegations, asserting that the Centre has provided funds to all states.
She clarified that the absence of specific mentions in the Budget speech does not imply exclusion from financial support.
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