Bangalore: Karnataka Health Minister Dinesh Gundu Rao has called on Prime Minister Narendra Modi to exempt health insurance premiums from GST. Rao criticized the current 18% GST rate on health insurance, describing it as excessively high and a barrier to healthcare accessibility. In a letter to PM Modi, which Rao shared on Twitter, he emphasized the need to prioritize citizens' well-being over high taxation. He argued that imposing such a high GST rate on health insurance is regressive and undermines efforts to ensure a healthy population.
Rao’s appeal comes as the GST Council is set to discuss the issue at its upcoming meeting, likely on September 9. He described the high GST rate as "draconian," especially in the wake of the Covid-19 pandemic, and criticized the irony of a government promoting Universal Insurance while taxing it so heavily. The Congress leader highlighted the significant impact of the high GST rate on economically weaker sections, noting that it makes health insurance unaffordable for many. Rao warned that rising insurance costs force people to forgo other necessities or avoid insurance altogether, leaving them vulnerable to financial distress from medical emergencies.
Rao advocated for either lowering or exempting GST on health insurance premiums as a step towards achieving Universal Insurance by 2047. The GST Council is expected to review recommendations from the fitment committee, which has suggested exempting pure term and health insurance policies from GST or reducing the rate to 5%. However, implementing these changes could result in a Rs 1,750 crore loss for the government if approved.
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