Mumbai: Insurance companies are demanding a separate exemption of Rs 1 lakh on payment of insurance premium under Section 80C of the Income Tax Act in the upcoming Union Budget to bring more people under the ambit of insurance. Insurance companies also want the Goods and Services Tax (GST) rate on health insurance products to be reduced from the current 18 per cent to five per cent to make such products more affordable to the common man. Finance Minister Nirmala Sitharaman will present the Union Budget for 2022-23 on February 1.
Tarun Rastogi, Chief Financial Officer, Canara HSBC OBC Life Insurance, said, “It has long been an expectation from the policy makers of the industry to encourage people to take life insurance, at least on payment of insurance premium under Section 80C. A separate exemption of at least one lakh rupees should be given. At present, all financial products are covered under Section (80C) of Income Tax Exemption and the limit is Rs 1,50,000. “We expect the Budget to consider creating a separate clause for tax deduction on payment of premium for life insurance,” said Subrajit Mukhopadhyay, executive director, Edelweiss Tokio Life Insurance.
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Vignesh Shahane, managing director and chief executive officer, Aegis Federal Life Insurance, said Section 80C currently covers several investment options including Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS) and National Savings Certificate. Considering the current scenario, a separate clause for term policies would be good.
According to the annual report 2020-21 of the insurance regulator IRDAI, the rate of insurance taking in the country is 4.2 percent of the GDP, while globally this figure is 7.4 percent. By March 2021, the rate of taking non-life insurance was barely one per cent.