Budget 2024 Expectations: ‘Need For A Relook At GST Rates On Insurance Premiums.
An interim budget is a temporary financial plan presented by the government when general elections are looming or a new government is set to take office. It serves as a provisional arrangement to meet the expenditure needs of the government for a short period until a new government can formulate and present a full-fledged budget.
However, here are some key areas where the insurance sector hopes to see some focus:
GST Rates On Insurance Premium
One of the expert said that a relook at the GST rates on insurance premiums is a reasonable expectation from the budget as social security measures are still evolving in the country.
“Insurance for all is the need of the hour to protect oneself and dependents from hardships arising from unexpected circumstances. While tax incentives act as positive nudges to make the right decisions, over the past several years, the orientation has been towards simplifying the tax structure and reducing incentives,” he added.
“While that stance may not change, the level of GST rates is worth revisiting as it will go a long way in improving insurance affordability,” he urged.
80D Deduction Limit
Another expert has sought the 80D deduction limit to be raised.
He said that the deduction limit under Section 80D for medical insurance premiums should be increased from Rs 25,000 to Rs 50,000 for individuals and Rs 50,000 to Rs 75,000 for senior citizens, reflecting rising healthcare costs.
Additionally, extending Section 80D benefits to the new tax regime would promote equitable access to healthcare.
Recap: Budget 2023
Income from traditional insurance policies where the premium is over Rs 5 lakh are no longer exempt from taxes, Finance Minister Nirmala Sitharaman announced in her Budget speech last year.
In the days preceding the unveiling of the 2023 budget, there was considerable anticipation regarding potential changes to Section 80C of the Income Tax Act. Many speculated that revisions were imminent, with expectations of an expansion in the existing deductions for health insurance premiums.