Karnataka Minister writes to PM Modi to reconsider 18 per cent GST on health insurance

Bengaluru:  Karnataka Health Minister Dinesh Gundu Rao on Friday shot off a letter to Prime Minister Narendra Modi, demanding reconsideration of 18 per cent Goods and Services Tax (GST) on health insurance. 

“I am writing to you to please reconsider the 18 per cent tax on Health Insurance in the GST Council meeting, scheduled on September 9,” he urged.

The letter said: “It is not only unfortunate but also ironic that a government which espouses the vision of Universal Insurance also taxes it at a rate so high, that it disincentives health insurance altogether.”

“The GST on health insurance is in one of the highest brackets of taxation at 18 per cent and has been so since 2017, despite several protests from all stakeholders, including politicians and policymakers across the board,” he said.

“A GST so high on what is an essential service/necessity, especially in a post-pandemic world, is draconian, to say the least, and not what a welfare state should be doing,” Rao said.

A high rate of GST directly impacts the cost of premiums, implying that health insurance will be more expensive.

“The rising cost, while not discernible to the upper economic classes, has a cataclysmic effect on economically weaker sections to whom even a marginal increase in the premium makes it inaccessible to purchase,” Rao emphasised.

“So, in that circumstance, they choose to either forgo another necessity to afford the premiums or, more often than not, avoid getting health insurance at all, which leaves them and their family exposed to a medical emergency which may leave them in severe financial distress,” he noted.

“While the rationale for such a high GST has never been explained, as the Health Minister in one of the states which is a pioneer in medical education and infrastructure, I see the positive impact of our cashless state health insurance which acts as a buffer in case of larger emergencies.

 This two-step coverage system is essential to the well-being of our citizenry,” Rao said.

“It is in this context, that I write to you to recommend to the GST Council, which is due to meet on September 9 to reconsider the 18 per cent tax for the middle and low-income policy holder on health insurance, which will certainly be a positive step in achieving ‘Universal Insurance’ in the year 2047,” Minister Rao said.