Budget 2023-24 Expectation: Reduce GST on insurance products to 12 per cent

GST on insurance products should be reduced from the current 18 percent to 12 percent. Additionally, rules on allowing input credit for group health insurance may be revisited to allow companies to get the benefit of GST credit on the medical insurance benefits given to employees. Lowering GST on certain general insurance covers including small business property policies and householder’s policies would lower the premium burden for homeowners/small businesses as well as increase the uptake of these policies, essential for better insurance penetration. ULIP products Proceeds on maturity above 2.5 lakh premium per annum are currently taxable. This should be reversed and the Section 10 10D benefit should be reinstated for the larger ticket premiums as well to promote larger savings through these unit-linked protection products. Pension products The proceeds of the pension/annuity products are currently only partly tax-free. All pension amounts should be made tax-free in hands of the end-insured customer to promote these retirement products. 80C limit The current limit is cumulatively Rs 1.5 lakh and includes a range of savings options including PPF, NSC, home loan, etc. There should be a specific limit for life insurance products only in the range of Rs 1-1.5 lacs. This will incentivize the purchase of life insurance policies and given the large protection gap in India, this would help bridge the gap and increase insurance penetration. 80D deductions We propose an upward revision in this limit for individuals to Rs 1 lakh. Given medical inflation and the rise in medical insurance costs, this limit should be revised upward. Health Insurance premiums paid for self, spouse, and dependent children can be claimed under 80D up to Rs 25,000 per financial year. The health insurance premium paid is additionally allowed up to Rs 25,000 for parents aged up to 60 years and up to Rs 50,000 for parents aged more than 60 years. The existing limits of Rs 25,000 for individuals (including spouses and dependent children) should be raised for promoting increased sum insured and better coverages. Similarly, the limits for parents should also be increased in line with the current premium cost. Amendments in Insurance Bill Reduction of capital from Rs 100 crore for insurers would reduce barriers to entry for more insurers. A composite license proposal for selling both Life and general insurance by a single insurer would help in increasing innovation, bundled life and health products, and increased distribution bandwidth of Life/ general insurance agents. Extend tax benefits to home insurance Tax benefits are currently extended to only Life and Health Insurance products. To promote home insurance, first-time home buyers should be allowed a deduction on premiums paid on home insurance. Deduction of Life insurance Currently, 80C allows deductions on various investments such as PPF, 5-year Fixed deposit, ULIP, ELSS Mutual Funds, and Repayments on Home loans amongst many others. Despite the rising prices and inflation, the maximum limit is only Rs. 1.5 lakhs which have remained the same in the past 8 years. There should be a separate section for Life Insurance Premium deductions like section 80D to increase the penetration of Life insurance. If not for a separate section, the current limit of 80C should be raised up to Rs 2.5 lakhs. The writer is Wholetime Director, Anand Rathi Insurance Brokers Pvt. Ltd. She tweets @InsuranceRathi. Views expressed are personal.   Read all the Latest News, Trending News,  Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.