India has one of the highest protection gaps in Asia with a penetration level of around 3 per cent to 4 per cent. With the imposition of Goods and Services Tax (GST), the revised tax bracket of 18 per cent on financial products has led to insurance products becoming dearer.
While the implementation of GST resulted in reduced tax rates for a host of products, GST has driven up the cost of doing business due to decentralized registration. Furthermore, since life insurance service for employees is a restricted item for input tax credit, retail consumers/policyholders and businesses fail to claim input credit.
Thus, we urge the concerned authority to consider pure protection life and health insurance as an "essential" service and therefore give these either a complete exemption from tax or subject them to a low, single-digit tax only.
(Ashish Kumar Srivastava is MD and Chief Executive Officer of PNB MetLife)
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