Mumbai: On the heels of demonetisation, the insurance industry is seeking higher tax exemptions, focus on e-payment and compulsory home insurance in the upcoming Union Budget that will help in increasing insurance penetration in India.
"We expect the Budget to spur consumption with a lower tax regime and higher tax-free slabs coupled with higher infrastructure spends," Edelweiss Tokio Life Insurance
Managing Director and CEO Deepak Mittal told PTI here.
He said in the life insurance space, the industry is expecting the Budget to create a level playing field for annuities, that will result in pension and retirement savings.
"...an annuity plan provides lifetime guaranteed pay-out, irrespective of how long one survives and will not decrease even if the interest rate falls. The government should come out with long-dated bonds for institutional investors (primarily annuity providers), which has the added benefit of helping infrastructure projects by raising funds," he added.
Echoing a similar view, Max Life Insurance Executive Vice CMD Rajesh Sud said the government is likely to announce simplification in Income Tax laws in line with the suggestions of Income Tax Simplification Committee, which will make Indian tax laws more competitive with respect to the global economies.
"It would be interesting how the government deals with delayed Goods and Services Tax, which was scheduled for April 1, 2017. There is also a need for streamlining tax saving vehicles, especially for elderly given the expected scenario of falling interest rates. This Budget should move annuity out of tax bracket to provide relief to almost 10 crore senior citizens of India," he said.
To help households create a portfolio for their long-term needs, he said, it is recommended that the Budget should create a separate income tax limit for the
deductibility of life insurance premium, which should be over and above the existing limit.
Max Bupa Health Insurance MD and CEO Ashish Mehrotra said last year's Budget reflected the government's agenda to accelerate the momentum in the health insurance space and make quality health care affordable and accessible to all sections of the society.
"This year we expect further incentives in the sector to encourage people to insure themselves for longer period like tax exemption each year based on number of years covered.
"Alternatively, tax exemption can be multiplied by number of years of coverage. For specialised health insurance firms, period of carry forward of business loss and depreciation should be extended to at least 12 years," Mehrotra said.
It would also be a welcome move if the government can provide relief by removing the 15 per cent service tax on health insurance premium and further increase the income tax deduction limit for individuals and families from Rs 25,000 to Rs 50,000, he said.
Future Generali India Insurance Company MD and CEO K G Krishnamoorthy Rao said, the sector expects key resolutions from the Union Budget for 2017-18, for making medical devices affordable which will lighten the burden on customers' pocket.
Further, he said, "higher tax exemption on health insurance to individual tax payers and also waiver of service tax on health insurance premium will be welcome move, as these will make the policies more affordable for public at large."
The government can do much in changing this perception and help increase the penetration in India, Tata AIG General insurance Company President, Insurance, M Ravichandran said.
"With the implementation of GST, the economy will witness positive strides. It will help create uniformity in the tax structure pan-India by removing several taxes and seamless tax credits, though with the added cost of compliances. For the insurance sector, we hope to be in the lower tax rate (that is 5 per cent or 12 percent) considering the low market penetration and the large middle class component with plenty of available potential," he opined.
Further, he said, given the rising cost of medical expenditures, it would be even more beneficial if the government could provide further tax benefits.
There is a need for the government to create awareness about the importance of insuring homes, he said.
"In the recent years, India has witnessed an alarming trend with regard to natural calamities...results in mammoth loss not only to life but property. The government's role here, and critically, should be to help increase home insurance penetration, as awareness levels are still low," he added.
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Updated Date: Jan 23, 2017 15:10 PM