Insurance Industry Seeks Key Tax Reliefs and GST Reduction in Upcoming Budget

Last updated: 08 January 2025

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The insurance industry is calling for significant tax relief and a reduction in GST rates in the upcoming Union Budget. Key proposals include lowering the GST on insurance premiums from 18% to 12%, and revising Section 80D tax deductions for health insurance, which have not been updated since 2015 despite rising medical costs. The industry also aims to boost retirement savings through tax incentives on annuities and the introduction of retirement security bonds, citing concerns over declining insurance penetration and high medical inflation.

The insurance industry has put forth significant demands ahead of the Union Budget, focusing on easing tax burdens and improving insurance accessibility for the public. Industry leaders have proposed measures like lowering GST rates on insurance, revising tax exemptions for health insurance premiums, and introducing tax-saving retirement security bonds. Decline in Insurance Penetration and Rising Medical Inflation The industry's demands are backed by alarming data trends: Insurance Penetr

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FAQ :

The insurance industry is advocating for a reduction in the Goods and Services Tax (GST) on insurance premiums from the current 18% to 12%.

The industry seeks to revise tax exemptions under Section 80D because the current deduction limit for health insurance premiums has remained stagnant at ₹25,000 since 2015, while medical costs have significantly increased.

Proposals include extending the ₹50,000 NPS deduction to annuities, simplifying taxation on pension products, and introducing tax-free retirement security bonds.

India's insurance penetration has slightly decreased to 3.7% in 2023-24, down from 4% in the previous year.

Medical inflation is estimated at a high 14%, making healthcare increasingly unaffordable for many households, which bear over 44% of health expenses.

Yes, the industry suggests zero-rating schemes like PMJJBY and smaller insurance policies with a sum assured up to ₹2 lakh from GST.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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