New Delhi: With the Union Budget 2023 just around the corner, industries have been vocalizing their expectations. One of the largest requests from the insurance sector is that health insurance and life insurance should not be subjected to GST.
"Insurance sector is still facing the issue of lower penetration rates and lack of digitisation of the sector. Our expectation from the union budget is for provisions that will help the sector to grow with higher penetration rates. Every year people are waiting to see if the union budget will make provisions for increased tax savings. As we all know, Life insurance products, particularly, are looked at as one of the tax saving provisions. That said, lowering the GST on such products can act as an impetus to an increased penetration rate. Another way to improve the current scenario would be to increase the overall investment limit that can guide people into purchasing the right sum assured value with higher premiums as a measure of tax savings," Sanjib Jha, Chief Executive Officer Coverfox Group said.
Additionally, in the health insurance category, there should be a larger deduction limit for health insurance premiums in Section 80D of the Income Tax, says Insurance sector.
"It would be highly beneficial if a separate section were provided for deductions for payments for term life insurance policies, given India's wide protection gap. Moreover, the current limit for health premiums (including preventive medical check-up costs) is too low and needs to be increased as well," Aatur Thakkar, Co-founder and Director at Alliance Insurance Brokers said.
"We should consider increasing the tax provisions in Section 80C and other areas so they can invest in life protection and life insurance. Additionally, we should provide insurance for seniors, which they are not denied coverage for. To further support this age group, we should reduce GST rates on senior health insurance policies or even exempt them from GST as they have worked their entire lives, paid taxes, and are now retiring; denying them coverage due to health reasons when they are ill is not feasible," Thakkar added.
Sarbvir Singh, President & CEO of Policybazaar.com also echoed similar notes on lowering GST on insurance. He added that a separate category of term insurance for tax exemption as the current 1.5 lakh limit easily gets expended under other eligible deductions under Section 80C. He added that annuity income should be made tax-free and said that premiums paid for home insurance should also be eligible for tax deductions.
