Even as the Union Budget 2023 is around the corner and is set to be announced on February 1 by Finance Minister Nirmala Sitharaman, various sectors are being bullish and expecting measures to boost their businesses. Among the sectors, the insurance industry said like Section 80C and 80D, a separate section should be dedicated to insurance to improve the insurance penetration in India.
Rakesh Goyal, director of Probus Insurance broker, said, “From the insurance perspective, there are many expectations from the upcoming Budget 2023. A large number of other financial products, such as public provident fund (PPF), equity-linked savings scheme (ELSS) and insurance, take up most of the Section 80C limit. A separate section should be dedicated to insurance, particularly term insurance. If we need to further improve the penetration of life insurance in India, there should be some push towards term insurance plans.”
He added that the tax deduction limit under Section 80C of the Income Tax, 1961, has not been increased for many years and it will be great if the limit is increased to Rs 2.5 lakh per annum. Coming to non-life insurance, the limit for health insurance is Rs 25,000, which is slightly lower and should be increased to Rs 50,000. “Currently, annuities are taxed in the hand of investors, which results in lower returns. There can be a huge relief to the investors if the annuities are tax exempted.”
Balachander Sekhar, co-founder of online Insurance distribution platform RenewBuy, said, “The Union Budget 2023 is less than a month away and industries are setting out expectations from this Budget. Finance Minister Nirmala Sitharaman rightly pointed out that the Indian middle class faces lots of pressures and challenges. Thus, there should be steps taken up by the government towards tax exemptions and tax incentives.”
He added that in the insurance industry, consistent support is needed from the government to encourage people, protect themselves with insurance coverage. With the increasing uptake in life insurance policies, there should be GST exemption or reduced GST slab to further cater to the growing consumer demand in life insurance. Similarly, Covid made everyone realise that our country is not adequately covered in the health insurance category too and there should be reduction in GST rate and tax exemptions. The insurance industry realises that people buy life and health insurance for tax-saving purposes too, thus a higher tax deduction limit will only help in increasing health and life insurance penetration.
Aftab Chaz, associate director and business head at online insurance platform for corporate employees and businesses Elephant.in, said, “With the Union Budget 2023 just around the corner, industries have been vocalising their expectations. Insurance plays an incredibly important role in India’s economy, and it needs to be bolstered through government support, so that more people can purchase insurance and reduce the existing insurance gap.”
He added that insurance companies, aggregators and distributors are collaborating to boost insurance coverage in the nation. Their initiatives will be fruitless without the assistance of the government. This year, the finance minister has to allocate plenty of funds to sectors that have a significant impact on people’s lives.
“One of the largest requests from the insurance sector is that health insurance and life insurance should not be subjected to GST. Additionally, in the health insurance category, there should be a larger deduction limit for health insurance premiums in Section 80D of the Income Tax. 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. We have come to realise as a nation during COVID-19 that a very small percentage of people had insurance, and paying for hospital bills has taken a large toll on the financial health of families. Those in the lower salary bracket pay the most in terms of the number of people. We should consider increasing the tax provisions in Section 80C and other areas so they can invest in life protection and life insurance,” Chaz added.
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