As India charts a transformative course in the insurance sector, industry leaders unveil key budget expectations to bolster the nation’s insurance penetration, currently at a modest 4%.
Satishwar B, MD & CEO of Aegon Life Insurance, emphasises the need for tax breaks on annuity plans. ‘No Taxation for Annuity Plans will benefit retirees and the industry,’ he states, addressing the alarming $85 trillion retirement fund gap projected by 2050. Simplifying or eliminating taxes on pension and annuity products could prompt increased investment, particularly in instruments like the National Pension System (NPS).
To tackle India’s insurance coverage gap, industry experts propose separating tax benefits for life-threatening risks in life and health insurance payments. By amending tax Sections 80C and 80D, a more targeted approach can be applied to enhance social security.
Another crucial expectation involves granting complete deductions for life insurance premiums. Satishwar B suggests permitting individuals to deduct the entire premium amount from their taxable income, fostering greater interest in insurance by providing full tax benefits.
GST reforms also take center stage in the industry wishlist. Advocates call for lowering GST on term life insurance and implementing a ‘Zero rating’ for essential policies like Pradhanmantri Jeevan Jyoti Bima Yojana, smaller insurance policies, and annuity products for NPS subscribers. These reforms aim to broaden financial security without compromising tax benefits.
As the budget announcement looms, these expectations signal a pivotal moment for the insurance sector, anticipating transformative policies that could elevate India’s insurance landscape and drive economic resilience.
Vakilsearch’s legal experts view the proposed tax breaks and GST reforms as a strategic move to boost India’s insurance sector. They highlight the potential impact on individual financial security and stress the need for legal support in navigating evolving regulations. As the industry transforms, Vakilsearch stands ready to provide expert legal guidance for insurance companies and individuals alike.
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