Ask GST Council to take a call on tax on health insurance premiums, Finance Minister tells Opposition

Finance Minister Nirmala Sitharaman speaks in the Rajya Sabha on August 8, 2024. Photo: Sansad TV via PTI

The Union government has nothing to do with imposing the goods and services tax (GST) on health insurance premiums, Finance Minister Nirmala Sitharaman insisted in the Rajya Sabha on Thursday (August 8, 2024), maintaining that the issue is entirely in the realm of the GST Council, which includes representatives from all State governments.

“Before GST too, medical insurance premiums were taxed,” she noted, during her reply to a debate on the Finance Bill. The Upper House returned the Bill following her reply, completing the process of approving the Union Budget for this financial year.

Countering charges that the Centre is pocketing the GST on health insurance premium, Ms. Sitharaman accused the Opposition of trying to gain political points on the issue. “Let the GST Council take a call,” she said, adding that every State levied taxes on health insurance premiums.

‘Write to State FMs’

Noting that the GST Council has discussed the issue thrice in the past, she said that the Finance Ministers of all States were present in the GST Council where decisions are taken by consensus. MPs who were protesting the tax with placards in Parliament must instead write to Finance Ministers in their respective States. “What stopped you?” she asked.

Objecting to allegations that the GST on health insurance premiums is “daylight robbery”, the Finance Minister pointed out that 50% of the GST collected goes to the States, and out of the Centre’s 50% share as well, 41% is given to the States.

Opposition members had also raised Union Minister Nitin Gadkari’s letter to Ms. Sitharaman on the matter. Without naming Mr. Gadkari, she said that the Opposition had got an opportunity to raise the issue with “some Ministers” writing a letter, claiming that “somebody” who was part of a delegation had put it out in the public domain without the Minister’s permission.

Balancing priorities

Ms. Sitharaman reiterated that the Union Budget balances several overriding imperatives, including growth, employment generation, capital investment, and fiscal consolidation. “We have tried to balance all these without compromising on any one sector,” she said.

The allocation for agriculture and allied sectors has increased in this Budget, the Finance Minister said. “₹1.44 lakh crore was the allocation last year, this time it has gone up to ₹1.52 lakh crore, that is ₹8,000 crore more,” she added. Ms. Sitharaman also questioned the conclusions of the Global Hunger Index, claiming that the report had been prepared without proper data from India.