Chennai, Jan 25 (IANS): An indication on reduction in the Goods and Services Tax (GST) rate on health insurance, giving infrastructure status to healthcare facilities, hiking tax deduction for insurance premium are some the budget wishes listed out by the insurance sector.
Senior industry officials also urged the government to take steps to increase the insurance penetration in the country.
Even though the GST rates does not form part of the union budget, insurers want an indication towards slashing of the rates on insurance premium in the Finance Minister Nirmala Sitharaman's budget speech.
"Health insurance is an essential commodity and needs to be slotted in the five per cent GST tax slab to make it more affordable to access quality healthcare," said Anup Rau, MD & CEO, Future Generali India Insurance
A significant reduction in the GST on all personal lines of products-from the existing 18 per cent to five per cent will encourage more people to buy health insurance. For senior citizens, it should be exempted.
According to Rau, increasing the tax deduction limit in Section 80D of the Income Tax Act - from Rs 25,000 to Rs 150,000 - can further help in penetration of health insurance.
"The rising medical costs and the increase in the incidence of critical illnesses make it an unmanageable expense for middle-income and lower-income groups. So, a higher tax deduction limit for health insurance plans is the need," he argued.
Given the under-penetration of insurance in India and the need to bring a wider gamut of population under the safety net, small ticket size insurance products like micro-insurance, sachet products, etc. can be exempted from GST, Rau added.
The services by the healthcare providers don't fall under the GST radar while at the same time buyer of the health insurance product pays the same given a large portion of the coverage is directed towards the cost of hospital bills, remarked Yogesh Agarwal, Founder & CEO, Onsurity, an insurance-health tech startup.
"In the upcoming union budget, we request the Government to intensify steps towards increasing insurance penetration in the country, since even today a large part of the population in the country still remains underinsured or uninsured," Roopam Asthana, CEO & Whole-Time Director, Liberty General Insurance said.
Citing the 2020-21 annual report of the Insurance Regulatory and Development Authority of India (IRDAI) Asthana said, the insurance penetration in India stands at 4.2 per cent of the gross domestic product (GDP) as against a global average of 7.4 per cent.
Asthana said as of March, 2021 the non-life insurance penetration in India stood at barely one per cent and urged the government to slash the GST from 18 per cent.
"Further even though GST is not covered under budget, however policy makers' should also look towards exempting or lowering GST rates on life insurance products and these should ideally be classified under essential product category," Tarun Rustagi, Chief Financial Officer, Canara HSBC Oriental Bank of Commerce Life Insurance said.
According to Rustagi, life insurance premium should be given a separate deduction limit of Rs 100,000 under Section 80C of the Income Tax Act.
Also, pension products should be given parity with NPS in tax incentives.
Further, for annuity products, deduction for principal component should be allowed and only the interest accretion should be taxed similar to fixed deposits.
Suitable changes should also be made under section 10(10D) to allow exemptions for all Life Insurance products where life insurance coverage is present which may be on the basis of policy term and sum assured ratio.