The industry expects the tax deduction limit for health insurance to be raised from the existing Rs 25,000 to Rs 50,000.
Insurance industry says like section 80C and 80D, a separate section should be devoted to insurance to improve insurance penetration in India
as well as union budget 2023 is around the corner and is scheduled to be announced by the Finance Minister on February 1 Nirmala Sitharaman, There is a boom in various sectors and they are looking forward to measures to promote their business. Across sectors, the insurance industry said that like Section 80C and 80D, a separate section should be dedicated to insurance to improve insurance penetration in India.
Rakesh Goyal, director, Probus insurance broker, said, “From an insurance perspective, there are many expectations from the upcoming Budget 2023. A large number of other financial products, such as public provident fund (PPF), equity-linked savings scheme (ELSS) and insurance , adopt most of the limits of section 80C. A separate section should be dedicated to insurance, especially term insurance. If we need to further improve the penetration of life insurance in India, some thrust towards term insurance plans should give.”
He said that the tax deduction limit under Section 80C of Income Tax, 1961 has not been increased for many years and it would be great if this limit is increased to Rs 2.5 lakh per annum. Talking about non-life insurance, the limit for health insurance is Rs 25,000, which is a bit low and should be increased to Rs 50,000. “Currently, annuities are in the hands of investors, resulting in low returns. Investors can get a big relief if annuities are made tax-free.”
Balachander Shekhar, co-founder, RenewBuy, an online insurance distribution platform, said, “The Union Budget 2023 is less than a month away and the industry is pinning hopes on this budget. Finance Minister Nirmala Sitharaman has rightly said that the Indian middle class faces a lot of pressures and challenges. Thus, steps should be taken by the government towards tax exemption and tax incentives.”
He said that in the insurance industry, there is a need for continuous support from the government to encourage people, to safeguard themselves with insurance coverage. With the increasing growth in life insurance policies, there should be GST exemption or lower GST slab to meet the growing consumer demand in life insurance. Similarly, Covid has made everyone realize that our country is not adequately covered in the health insurance category as well and there should be a reduction in the GST rate and tax exemptions. The insurance industry has realized that people buy life and health insurance for tax-saving purposes as well, thus a higher tax deduction limit will only help in increasing health and life insurance penetration.
Aftab Chaj, Associate Director and Business Head, Elephant.in, an online insurance platform for corporate employees and businesses, said, “With the Union Budget for 2023, industries are vocalizing their expectations. Insurance plays an incredibly important role in India’s economy, and it needs to be strengthened through government support, so that more people can buy insurance and bridge the existing insurance gap.”
He said that insurance companies, aggregators and distributors are collaborating to promote insurance coverage in the country. Without the help of the government, his initiative would be fruitless. This year, the Finance Minister has to allocate a lot of money to sectors that have a significant impact on people’s lives.
“One of the biggest requests from the insurance sector is that GST should not be levied on health insurance and life insurance. Additionally, in the health insurance category, there should be a higher deduction limit for health insurance premium under section 80D of income tax. In view of the wide protection gap in India, it would be very beneficial if a separate clause is provided for deduction towards payment for life insurance policies. Further, the present limit of health premium (including preventive medical check-up cost) is very low and also needs to be increased. What we realized as a nation during COVID-19 was that a very small percentage of people had insurance, and paying hospital bills took a toll on families’ finances. In terms of number of people, the lowest paid are the highest paid. We should consider increasing the tax provisions in section 80C and other sectors so that they can invest in life cover and life insurance.”
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