Budget 2021 Expectations: Why Modi govt needs to relook at tax relief, FDI on health insurance?

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Updated: January 29, 2021 12:27 PM

Union Budget 2021 Expectations for Insurance: The expenditure on healthcare, health insurance, and other related debates have become the epicentre of policy decisions since the pandemic hit India.

Insurance Budget 2021 Expectations, Budget 2021 Expectations for InsuranceThe impact of the coronavirus in the year 2020 has also led many Indian promoters to face challenges, which has significantly impacted the growth and development of the insurance sector.

Union Budget 2021-22 Expectations for Insurance: The coronavirus pandemic has brought the government’s attention more towards the healthcare sector. The expenditure on healthcare, health insurance, and other related debates have become the epicentre of policy decisions since the pandemic hit India. Even prior to the pandemic, health insurance was a growing sector, however, the pandemic has proved the indispensable nature of having a safety net when it comes to healthcare costs. This, on other hand, has also raised the need for tax impetus on individual’s expenditure on health products. 

Tax relief on insurance

“It becomes important to increase the limits defined for mediclaim premium tax deduction under section 80D of the Income Tax Act to Rs 1 lakh (Rs 50,000 for self & spouse + Rs 50,000 for Parents),” said Mayank Bathwal, CEO, Aditya Birla Health Insurance. It is also crucial to reintroduce the medical reimbursement with a higher limit of Rs 50,000 tax deduction, which got merged in standard deduction during the finance budget 2018, Mayank Bathwal added. 

Also Read: Union Budget 2021 | Infra stocks to watch: These shares may gain with a growth-oriented Budget

Increasing FDI beyond 49%

The impact of the coronavirus in the year 2020 has also led many Indian promoters to face challenges, which has significantly impacted the growth and development of the insurance sector. However, foreign promoters are in a relatively better position to increase their stakes beyond 49 per cent, but are constrained by the regulatory restriction of foreign investment limit.

Also Read: Medical device manufacturers keep their hopes high for a level play to contribute for affordable, accessible Healthcare

“While Indian Promoters of insurance companies, including banks, are at different stages of their return to normalcy, an increase in the FDI in the insurance sector beyond 49 per cent would immediately help the strong growth of the insurance industry and propel it to the next level,” Rakesh Wadhwa, CMO, Future Generali India Life Insurance, told Financial Express Online. Especially in life insurance, which is capital intensive, it would help the insurance companies to come back on track vis-à-vis their strategic plan, Rakesh Wadhwa added. Increasing FDI beyond 49 per cent at this juncture will, therefore, be a step in the right direction, he further said. 

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