Union Budget 2024: India’s insurance sector has some key expectations for the upcoming Union Budget 2024, primarily focused on tax benefits and regulatory changes to make insurance products more attractive and accessible to a wider audience.
Bringing down the Goods and Services Tax (GST) rate applicable to insurance products, particularly health insurance, is among the major expectations. This would make them more affordable for consumers.
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An increase in the deduction limits under Section 80D for health insurance premiums paid for oneself, dependents, and senior citizen parents is anticipated. This would provide greater tax relief for healthcare expenses.
Here’s what industry leaders want from Finance Minister Nirmala Sitharaman in the Union Budget 2024;
Increase the Upper Limit For Tax Exemption
Rakesh Jain, CEO of Reliance General Insurance said that the upcoming Union Budget 2024 presents an opportunity to promote sustainable development goals by prioritising risk management and protection.
Jain recommends that the government consider the following measures:
- Increase the upper limit for tax exemption on health insurance premiums to Rs 75,000.
- Introduce financial support or tax benefits for extensive insurance on electric vehicles (EVs).
- Give tax advantages for cyber insurance, particularly for small and medium businesses, to enhance their ability to withstand cyber risks and data breaches.
- Mandate health insurance to all employers for their employees to bring holistic protection to the working class.
“Implementing these measures will not only create a more resilient and sustainable economic environment but also pave the way for a healthier and greener future, fostering a sense of optimism and progress,” Jain added.
Lower GST On Life Insurance Products
Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance, said, “With increased earning power and disposable income, Indian citizens will be able to invest in versatile life insurance products for their peace of mind and financial goals. Given the under penetration of life insurance in the country, there is substantial room for sectoral growth.”
Chugh added that some of the sector’s budget expectations from the finance ministry is to consider lower GST on life insurance products.
Additionally, in the pension products category, to secure the post-retirement financial needs of the individuals, “we urge the government to align life insurance annuity or pension products with the National Pension Scheme (NPS) and allow the similar additional deduction of Rs. 50,000 or more for life insurance annuity or pension products under Income Tax,” Chugh urged.
Long-Term Capital Gain On High-Value Products
Chugh also urged the ministry to introduce Long Term Capital Gain taxability for all high-value traditional life insurance plans (more than Rs.5 lakhs aggregate annual premium), in line with high-value ULIPs.
“This will bring in uniformity and tax efficiency for insurance customers at par with other similar financial products in the market.”
Affordability and Accessibility
Neel Chheda, Chief of Underwriting and Data Science, TATA AIG General Insurance, said, “We are hopeful for policy measures that will further bolster the insurance sector. We anticipate initiatives that enhance the affordability and accessibility of insurance products, particularly for underserved segments. Increasing tax incentives for insurance offerings would significantly encourage more individuals to secure comprehensive coverage, providing them with financial protection against unforeseen events.”
“Additionally, we look forward to regulatory reforms that support digital innovation and simplify compliance processes, enabling insurers to deliver more efficient and customer-centric services,” Chheda added.
Budget 2024 Date
The government’s final decisions will be revealed in the budget presentation scheduled for July 23, 2024. These changes are expected to boost insurance penetration rates and contribute to the overall financial well-being of the population.
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