Insurance want to improve penetration of products by giving tax incentives to customers
General insurance companies have sought tax incentives including the removal of withholding tax and incentives for purchase of home insurance, in the Union Budget 2018 to be presented by the Finance Minister.
K Sanath Kumar, Chairman and Managing Director, National Insurance told Moneycontrol they have sought a reduction in tax also for the agriculture insurance space.
At present, reinsurance premium attracts withholding tax and this is applicable whenever an insurer pays the premium to a reinsurance company for covering their risks.
Non-life insurers have been trying to push home insurance through a variety of methods including increasing the coverage and features of the policy as well as pushing for tax incentives so that customers are encouraged to buy the products.
Even after incidents like Chennai floods of 2015 where there was heavy damage to life and property, while the enquiries had gone up among the companies. However, the actual uptick of the product was very low. Housing societies have also not been talking the product for their residential complexes.
Apart from this, there is also a demand to increase the amount of deductions under Section 80D of the Income Tax Act. Currently, individuals below the age of 60 years are eligible to claim upto Rs 25,000 as deduction for health insurance premium and those above 60 years are eligible to get upto Rs 30,000.
The Union Budget will be presented on February 1 by finance minister Arun Jaitley. The insurance industry has sought these reforms in order to improve insurance penetration in the country which is below 5 percent.Non-life penetration as a percentage of the gross domestic products is less than one percent though it has been increasing marginally over the last two years.
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