The insurance sector of India is hoping for forward-thinking steps towards inclusivity, making insurance accessible to people with no access to insurance and with a particular focus on supporting the LGBTQIA+ community from interim budget 2024-25.
"We would also recommend the removal of the five percent GST on room rent exceeding Rs 5,000, particularly in metropolitan areas where prevailing prices in major private hospitals are high. These proposed measures will foster a more inclusive landscape and help increase insurance accessibility and penetration, " said Shanai Ghosh, MD & CEO, of Zuno General Insurance.
However, the insurance sector is also hoping for tax relief from the Union budget 2024, which will enable insurers to give customers pricing advantages, besides a provision to introduce fresh schemes to offer customers more options to safeguard against escalating health costs in India.
"I anticipate the 2024-25 budget to be pivotal for the insurance sector. While it's an interim budget, our industry expects significant considerations. A re-evaluation of the current 18 percent GST rate is crucial, aiming to reduce premiums and grant customers pricing advantages," said Mayank Gupta, Co-Founder, of Zopper, an insurance brokerage.
"Strategic promotion of term life products through initiatives is essential. Embracing technology remains paramount in achieving the Insurance Regulatory and Development Authority's (IRDAI's) 'Insurance for all by 2047' vision. Moreover, facilitating more mergers and acquisitions will enable us to introduce innovative products, extending our reach to the masses," Gupta added.
At the beginning of 2023, life and health insurance companies had drawn up budget wish lists – a separate tax deduction bucket for life insurance premiums, a higher deduction limit for health insurance premiums, and tax exemption on annuity income.
However, on February 1, Finance Minister Nirmala Sitharaman delivered a blow to the traditional endowment category, the core of insurers’ product portfolios. She announced the withdrawal of tax-free status to maturity proceeds of traditional endowment products where the annual, aggregate premiums paid by the policyholders exceed Rs 5 lakh. This applied to policies sold from April 1, 2023.
"We recommend the government consider the following measures: raise the health insurance premium tax exemption limit to Rs 75,000, decrease GST on electric vehicle (EV) insurance to five percent, offer subsidies or tax credits for comprehensive insurance on EVs, introduce a tax deduction for home insurance premiums under Section 80C, and provide tax incentives for cyber insurance, especially for small and medium enterprises, to bolster resilience against cyber threats and data breaches, " said Rakesh Jain, CEO, Reliance General Insurance.
Life insurance firms, too, got a rude shock from the Budget 2023-24 when Sitharaman pushed for Indians to adopt the new income tax regime that does away with exemptions on investments. She also announced curbs on exemptions involving high-value insurance policies.
“(The) proposal…is to limit income tax exemption from proceeds of insurance policies with very high value,” Sitharaman said. From the new fiscal year 2023-24, earnings from insurance policies having an aggregate premium of more than Rs 5 lakh will not be exempt from income tax, the budget had said.
"We have been asking the government to introduce a separate tax deduction limit for life insurance for the last five to six years but nothing has happened. The reason is that the current Section 80 C is too cluttered where a person can claim deductions up to Rs 1.5 lakh for PPF (Public Provident Fund ), Sukanya Samriddhi Scheme, ELSS (Equity Linked Saving Scheme), tax saving fixed deposits, school fees, the principal sum of a home loan, including life insurance, "said Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance.
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