Piyush Goyal, India's interim finance minister, will present the budget on Feb. 1, in the absence of Finance Minister Arun Jaitley, who is currently in the United States for medical treatment.
Following are some of the pre-Budget expectations from some of the prominent Indian insurers
“Lowering the GST from the current rate of 18 per cent to 5 per cnt will greatly benefit the industry & consumers''
Mahesh Balasubramanian,MD & CEO, Kotak General Insurance
The Finance Minister took some significant steps in the last union budget with respect to revising deduction limits on health insurance policies and allowing flexibility in claiming deductions for multi-year policies. This I am sure, has greatly benefited the consumer. On the back of such initiatives, Health Insurance is likely to grow at around 25 per cent, higher than the general insurance industry which will around 15-17 per cent. .
Increasing insurance penetration is very important for the country since insurance guards against losses arising out of eventualities and has a direct impact on the country’s GDP. Lowering the GST rate for insurance products will make it more affordable for customers and aid in increasing penetration. Lowering the GST from the current rate of 18 per cent to 5 per cnt will greatly benefit the industry & consumers.
Also, today the investment returns on both Shares and Securities for General Insurance companies are treated as business income and hence taxed at the corporate tax rates which are between 25-30%. If this can be brought on par with Life Insurance companies where the applicable rate is 12.5% or treat the same as Capital Gains and tax it at the rates applicable for short team or long-term capital gains as the case may be, it will be a significant boost for the industry.
“Separate Taxation for pure protection plans''
Vineet Arora, MD and CEO, Aegon Life Insurance
India has a huge protection gap of 92 per cent. This puts many families at the risk of financial stress, in case of the death of the breadwinner. A separate section for pure protection plans – Term Plans, outside 80C will help nudge the middle class to take appropriate protection plans for their family.
“Incentivise investments in long term savings in pension''
Sunil Sharma, Chief Actuary & Chief Risk Officer, Kotak Life Insurance
Current provision u/s section 10 (10d) is that the maturity proceeds from life insurance shall be liable to tax if the sum assured under the contract is lower than 10 times the premium. The provision does not differentiate between a regular premium paying policy, a limited premium paying policy and a single premium paying policy. It will be more appropriate to align this with the IRDA Product regulations, which define the minimum sum assured at a lower multiple of premium.
Retirement benefit in India is a very critical benefit for elderly people. It is important that government incentivize investments in long term savings in pension by having an explicit investment in pension Products. This could be on Exempt-Exempt-Tax (EET) mechanism. This is likely to ensure retiring people in the future do not have to depend upon the resources from exchequer post-retirement.”
“Hoping for positive tax benefits in the home insurance area''
Rikhil Shah, Chief Financial Officer, SBI General Insurance
2018 has been an important year for the Insurance sector with multiple announcements and regulatory changes. From the merger of 3 PSU non-life insurers, Ayushman Bharat, changes in rules for motor insurance and inclusion of mental illness in health insurance, we’ve witnessed a lot of changes in the interest of the consumer. With the budget coming, we are positive and optimistic that it will bring more good news for the insurance sector. There might be some tax exemptions for the patrons. We’ve already seen a GST cut which was a welcome move for the insurance industry.
We are hoping for positive tax benefits in the home insurance area as in the last year we have seen some major calamities and home insurance has certainly gained importance. We are also hoping for some regulatory framework in the healthcare/pharma industries to make insurance a reality for all in India.
Like last year we are expecting the focus of the government to be more on the protection space for the wellbeing of the population.
“Revise the 80 D limits for Health Insurance premiums under IT Act''
Shreeraj Deshpande, Principal Officer and Key Managerial Personnel, Future Generali India Insurance
The Union Budget 2019-20 holds many expectations even as India's domestic economy is going through a critical phase of growth.Each year during the pre-Budget time, the Indian healthcare industry focuses on the one statistic that refuses to change: government spending money on healthcare stays put at around 1 per cent of the GDP. The healthcare sector can only get affordable if the government revises this upwards.
The other point is that hospitals are treated on equivalence with the entertainment industry regarding charges for utilities like power consumption. Cost of medical equipment’s is another pain point which the government needs to work on.
Medical inflation is growing at 14-16% every year and the healthcare expenses of the average household can easily exceed the medical allowance limit of Rs. 15000 per annum. Companies usually cap the medical allowances at the tax-free limit of Rs. 15000. If this limit is revised upwards, the companies will also be encouraged to hike the allowance.
We expect the government to revise the 80 D limits for Health Insurance premiums under IT Act and further reduce the GST for health insurance premiums especially for retail policies. We would also like to see if the government can make health insurance mandatory either through membership of Government schemes or a policy from commercial insurer. This will help achieve a goal of universal health.
2018 saw many disasters across the world and in India. Due to the unusually high rainfall during monsoon season, Kerala witnessed the worst floods in August that killed over 400 people and many more missing. Chengannur and Thrissur were the worst hit places in the state. A total of 2,923 houses were completely damaged in the floods.
Because of such uncertainties, the government should make home insurance compulsory and incentivise home buyers by providing income tax benefits for the premium paid towards a policy. This will not only ensure protection against financial loss for customers, but also aid in deepening insurance penetration in the country.
“Enhancing the tax rebate limit under Section 80D from the current value of Rs. 25,000 can be a great booster''
Prasun Sikdar, Managing Director & Chief Executive Officer at Cigna TTK Health Insurance Company
Health insurance sector in India needs immediate attention, as healthcare continues to remain one of the most demanding subject in the country. There is an absolute need to spread awareness about health insurance amongst the population, considering the rising healthcare cost in the country. To promote health insurance in the country enhancing the tax rebate limit under Section 80D from the current value of Rs. 25,000 can be a great booster, further a waive off GST charges on insurance premium which are currently 18 percent can help increase insurance penetration in the country.
To make healthcare in India more accessible new digital payment methods can be extended to consumers, this will certainly make health insurance payment process more convenient.
Reconsider the GST rates on Insurance policies
Anup Rau, CEO of Edelweiss General Insurance
We believe irrespective of the budget, I would like the policy makers to consider the GST rates on Insurance policies. Our penetration continues to be extremely low and with a price sensitive market like India, 18% is significant addition to the cost.