Ahead of the Union Budget 2022-23, Insurance sector is of the view that the government should work on plan to deepen insurance penetration, special incentives for women and introduction of separate tax benefits for term insurance outside of Section80C. Currently, all financial purchases are clubbed under the same IT deduction (80C) capped at Rs. 1,50,000. Sharekhan believes separate tax benefits for term insurance will support higher insurance penetration, helping insurance companies.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

In this regard, Axis Securities believes that the government might provide further tax incentives to enable people to buy adequate health insurance which has gained importance amidst the pandemic. A separate bucket for investment in life insurance for tax rebates under section 80 (C) is expected, it observes.

See Zee Business Live TV Streaming Below:

"We, as an industry, are expecting that the upcoming budget will focus on deepening insurance penetration in the country. One such goal will be to secure one’s life after retirement. Therefore, it’s imperative to establish parity across all pension products," said Kamlesh Rao - MD & CEO, Aditya Birla Sun Life Insurance.

As many individuals use pension products as a source of regular source of income post retirement, Rao believes that pension plans should get similar treatment as NPS as far as tax relief is concerned to help build corpus for retirement income.  

The sector also wants the government to increase Section 80D (Medical) of income tax for health insurance, which is Rs. 25,000 for individuals and Rs. 50,000 for senior citizens.

Insurance sector is also of the view that stamp duty levied on term life insurance in addition to 18% GST should be exempted as term life insurance policies are pure risk products and not investment products.

"While investment in NPS offers additional tax deductions of Rs 50,000 under section 80CCD, life insurer’s pension plans do not enjoy this benefit. Furthermore, in case of pay-out under pension or annuity policies, only the accretion amount should be taxed i.e., annuity should be divided into two components – principal and interest, and only the interest portion should be taxed," says Aditya Birla Sun Life Insurance MD & CEO.

He is also of the view that special incentives should be announced for women policyholders as currently less than one-third of the women population is secured through life insurance policies. "These measures will not only encourage long-term savings but will also promote capital formation," Rao added.  

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)