Indian insurance firms are looking for several tax breaks from the central government in the 2019 Union Budget to increase the attractiveness and affordability of insurance products, hence fostering increased insurance penetration countrywide.
Furthermore, these firms have requested tax breaks on annuity products, as well as reduced Goods and Services Tax (GST) on their products. Furthermore, the sector hopes that the government will modify the new tax structure to provide exclusions for life insurance products. Currently, the new tax regime prohibits any deductions or exemptions that were available under 80C under the previous tax regime.
"We urge the government to align life insurance annuity or pension products with the National Pension Scheme (NPS) and allow a similar additional deduction of Rs 50,000 or more for life insurance annuity or pension products under Income Tax," said Tarun Chugh, Managing Director and CEO of Bajaj Allianz Life Insurance. Non-life insurance businesses have repeated the need to cut GST rates on health insurance products from 18% to 5% in order to make them more affordable and hence increase their acceptance.
"Out-of-pocket expenditures remain high relative to worldwide standards, showing a significant protection gap. The insurance regulator has set a goal of having insurance for everyone by 2047. Thus, our suggestion to the government is to decrease the present 18% GST rate on important services such as health insurance," said Prasun Sikdar, Managing Director and CEO at ManipalCigna Health Insurance.
In recent years, insurers have also recommended increasing the tax deduction maximum under Section 80D of the Income Tax Act. Under this clause, a person can claim a deduction of up to Rs 25,000 for health insurance premiums and medical expenditures paid during the previous tax system. According to experts, increasing the medical insurance deduction maximum to Rs 50,000 for individuals from the current Rs 25,000 and to Rs 75,000 for the elderly from Rs 50,000 will assist to meet the increase in healthcare costs.
"Besides financial security, health insurance gives tax benefits under Section 80D, making it appealing from a savings standpoint. "The 80D tax exemption should be linked to inflation and revised on a regular basis," said Krishnan Ramachandran, Managing Director and CEO of Niva Bupa Health Insurance.
According to Dr S Prakash, Managing Director and Chief Executive Officer of Galaxy Health Insurance Company Limited in India, the insurance industry is also looking forward to better implementation, increased participation of multi-specialty and corporate hospitals, and expanded reach to the deserving Below Poverty Level (BPL) population.
