Pitch Report: Insurers want Budget 2025 to deliver lower GST, higher exemptions

On raising the tax exemption limit, analysts have suggested raising raising the deduction limit given under Section 80D to Rs 50,000 for all taxpayers and Rs 1 lakh for senior citizens. Section 80D of the Income Tax Act, 1961, allows individuals to claim a tax deduction for health insurance premiums.

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While the new tax regime does not encourage exemptions, experts have suggested that the regime allow for exemptions for health-insurance premiums.

FDI boost

Insurance players also hope for improved funding through foreign direct investment (FDI) rote.

The government had previously proposed amendments to the Insurance Act of 1938, including raising the FDI limit from 75 percent to 100 percent and introducing a provision for a composite license. The composite licence is to permit insurers to offer life, general and health insurance products under a single licence.

The industry had been waiting for the bill to be introduced during Parliament's winter session. Since that did not happen, insurers will keenly watch the Union Budget to see if any progress will be made.

Moody's Ratings has said that raising the FDI limit in the insurance sector could improve profit margins, inject substantial capital, strengthen financial reserves, and encourage new listings within the sector.