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On Wednesday, Union Finance Minister Nirmala Sitharaman responded to the request of Nitin Gadkari to remove the GST on the insurance policies, that is mainly of 18 percent GST on medical insurance policies. Nitin Gadkari recently requested the finance minister and prime minister to look for the removal of the GST on insurance on the priority bases, as those are basic life saviours of the victims family.

Nirmala Sitharaman in Parliament said that 18 percent of the Goods and Services Tax (GST) collected from the health and general insurance premiums is being shared between the central government and state government. She said that the only 9 percent is with the center and the remaining 41 percent is sent to the state government. In total, 73 to 74 percent collected on the insurance premiums are only sent to the states. The Opposition of the Indian bloc MPs started protesting in parliament for the cancellation of GST on the insurance. Since Nitin's letter came to the minister’s office, opposition and many are protesting in support of cancellation of the GST.

Addressing this issue, Nirmala said, I want to tell two important points about the GST that is being collected. There was tax on Medical insurance even before introducing GST, after GST was introduced the tax name was just changed to GST. Those who are protesting now, they have never asked for the cancellation of tax before. For the financial year, Nirmala said that Rs 12,264 Cr has been collected in form of GST from the life and medical insurances that went to the state. She also said that the central government has collected Rs 24,000 Cr collected in form of GST on health and life insurance in the last three years and also another Rs 3,274 Cr on the reissuance of the health policies.
Following the memorandum received by the Road Transport Minister Nitin Gadkari given by the Nagpur Division Life Insurance (LIC) employees union, Gadkari has written a letter on July 28th to the prime minister and finance minister.

Previously it was 15 percent service tax on the insurance and extra of basic service tax, swachh bharat cess and Krishi Kalyan Cess, by which the same tax has turned into 18 per cent in form GST. Insurance policies fall under the GST because they fall under the category of services and necessities. The removal of GST on the health and medical insurance can be done only by the recommendation of the GST council. In 2022-23 year, Maharashtra, Karnataka, Tamil Nadu, Gujarat and Delhi have collected 64 percent of total health premium and remaining was given to the states itself.