As the Union Budget 2023 is approaching nextly, the industries are putting their points. One of the sectors is the insurance sector which asks for the exemption for health insurance and life insurance, citing that no GST would be levied on these two.
Tax experts mentioned that the “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,”
The insurance sector mentioned that for the insurance division, there must be a larger deduction limit for the health insurance premiums in Section 80D of the income tax.
It would be tremendously useful if a distinct section were created for exemptions for expenses for term life insurance policies given India’s enormous protection gap, tax specialists said. Furthermore, the present cap on health premiums (including preventative medical check-up charges) is too low and should be raised as well.
According to the tax expert, We should think about expanding the tax laws in Section 80C and other places so that people may engage in life security and insurance. Furthermore, we need to provide insurance for the elderly that is not refused coverage. To further encourage this age demographic, we should cut or even exclude senior health insurance plans from GST as they have performed their whole day, paid taxes, and are currently retired; refusing them insurance due to health grounds while they are ill is not practical.
Another tax expert stated the same thing about reducing the GST on insurance. Under section 80C, He remarked that there should be another category of term insurance for tax exemption as the existing 1.5 lakh limit would get exhausted in less time by other qualified deductions under Section 80C. He said that the annual income must not be levied to tax along with that the specified premiums filed for the home insurance must qualify for tax deductions.
