Finance Minister Nirmala Sitharaman is anticipated to unveil the Union Budget for the financial year 2024-25 by the final week of July. Recommendations proposed by insurance experts seek to improve the reach and development of insurance within India.
No taxation for annuity plans
Annuity and pension products play a crucial role in ensuring a stable income during retirement years.
Satishwar B, MD and CEO at Bandhan Life Insurance highlights the significance of tax benefits in this sector.
“Enhancing the tax efficiency of annuity investments or eliminating taxes altogether could motivate retirees to safeguard their financial well-being with these financial instruments,” he stated.
NPS tax exemption extended.
Satishwar B also suggests expanding the existing ₹50,000 tax exemption under Section 80CCD(1B) to encompass pension and annuity schemes offered by life insurance companies. He mentioned that this move could greatly bolster retirement savings.
Individual tax incentives for life and health insurance policies.
Insurance professionals are suggesting changes to Sections 80C and 80D in order to provide unique tax advantages for term life policies. This proposed modification has the potential to bridge the insurance coverage gap and strengthen the overall social security system.
Complete deduction for life insurance premiums.
Providing individuals with the opportunity to deduct the complete sum they have paid for term life insurance premiums from their taxable income, without any decrease resulting from claims made under other provisions, would encourage a greater number of people to acquire insurance.
Enhancing affordability through GST reforms in the insurance sector.
Insurance is not just a luxury, but rather an essential safety measure that offers financial security in times of illness, accidents, or the unfortunate loss of a primary income earner.
Satishwar B proposes a reduction in the Goods and Services Tax (GST) on term life insurance, stating that the current rate of 18% can be a hindrance. According to him, by lowering or even eliminating the GST on term life insurance, it would become more accessible and affordable. This would encourage more individuals to participate in insurance schemes, ultimately leading to improved financial security for the entire society.
Harnessing data and technology.
The incorporation of data and technology is crucial as the life insurance industry progresses. Platforms like Aadhaar, the Income Tax Portal, and the Account Aggregator Network are transforming digital underwriting practices.
Satishwar B is of the opinion that the Ayushman Bharat Health Account (ABHA) has the potential to enhance the capabilities of life insurance firms through streamlining underwriting procedures effectively and precisely.
Adopting the digital revolution.
Prasanth Madavana, one of the founders of Fedo.ai, emphasized the immense potential of initiatives such as the National Digital Health Mission (NDHM). He highlighted that the creation of the NDHM marks a significant milestone in establishing a strong digital framework that enhances the accessibility and affordability of insurance services. Additionally, he emphasized the importance of initiatives like eSanjeevani in expanding the reach of medical consultations, which in turn supports the insurance industry by simplifying the claims process and enhancing service delivery.Read More
