Finance Minister Clarifies GST on Health Insurance Amid Opposition’s Criticism

Finance Minister Nirmala Sitharaman clarifies that GST on health insurance is under the purview of the GST Council, countering opposition claims and highlighting budgetary priorities.

Key Points

• The GST on health insurance premiums is decided by the GST Council, not the Union government.
• Finance Minister Nirmala Sitharaman defended the GST’s imposition, noting that health insurance was taxed even before GST.
• The GST Council, which includes State representatives, has discussed the issue three times, with decisions made by consensus.
• Opposition’s criticism was countered by highlighting that 50% of GST revenue goes to States.
• The Union Budget prioritizes growth, employment, and agriculture, with an increased allocation for the latter.

Finance Minister Nirmala Sitharaman made it clear in the Rajya Sabha on Thursday, August 8, 2024, that the Union government is not responsible for the imposition of the Goods and Services Tax (GST) on health insurance premiums. She emphasized that the matter falls under the jurisdiction of the GST Council, which includes representatives from all State governments.

Responding to a debate on the Finance Bill, Sitharaman pointed out that medical insurance premiums were subject to taxation even before the implementation of GST. The Rajya Sabha returned the Finance Bill following her reply, thereby completing the process of passing the Union Budget for the current financial year.

Countering the opposition’s allegations that the Centre is unfairly benefiting from the GST on health insurance premiums, Sitharaman accused them of politicizing the issue. She reiterated that the decision rests with the GST Council and not the central government, reminding that every State also levied taxes on health insurance premiums prior to GST. Sitharaman urged the MPs protesting the tax in Parliament to instead direct their concerns to the Finance Ministers of their respective States.

The Finance Minister dismissed claims that the GST on health insurance premiums amounts to “daylight robbery,” pointing out that half of the GST collected is allocated to the States. Additionally, from the Centre’s 50% share, 41% is further distributed to the States.

During the session, opposition members also referenced a letter from Union Minister Nitin Gadkari to Sitharaman on the issue. Without directly naming Gadkari, Sitharaman mentioned that the opposition seized the opportunity to stir controversy over a letter made public by “somebody” without the Minister’s consent.

Sitharaman further highlighted the Union Budget‘s efforts to balance multiple priorities, including economic growth, job creation, capital investment, and fiscal consolidation. She assured that no sector had been compromised in the process. Notably, she mentioned an increased allocation for agriculture and allied sectors in the Budget, rising from ₹1.44 lakh crore last year to ₹1.52 lakh crore this year.

She also questioned the findings of the Global Hunger Index, suggesting that the report’s conclusions may be flawed due to a lack of accurate data from India.