Insurance Budget 2024 Speech Highlights: Today, July 23 marks the Budget Day for the Republic of India. Finance Minister Nirmala Sitharaman’s Union Budget 2024 speech has begun in the parliament. Budget 2024 highlights and major announcements are closely watched by crores of Indians. This time, the expectations from Budget 2024-25 are much higher than seen during the Interim Budget 2024.
Following budget announcements, will the life and health insurance plans become more affordable for the average person.
Finance Minister Nirmala Sitharaman Budget speech 2024 started with the live proceedings being watched by lakhs of taxpayers and the common man looking for some relief from budget announcements
As per provisions of section 194DA, any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy, other than the amount not includible in the total income under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax thereon at the rate of 5% on the amount of income comprised therein.
Now, FM has proposed that TDS under section 194DA of the Act be reduced from 5% to 2%. The amendment will take effect from 1st day of October 2024
No new proposals were made for the insurance sector. However, a big focus for the FM was on job creation. The Finance Minister proposed new schemes for the unemployed youth of India. Five new schemes for the employee workforce show the government's focus on job creation, especially in the skilled labor category.
Employee Linked Scheme has been launched.
1 month's salary to new employees receiving a salary up to Rs 1 lakh.
Rs 3000 reimbursements were made to manufacturing units for new jobs created by them.
Several measures have been taken towards skilling the employee workforce.
NPS new rules will be in place.
Big changes in capital gains taxation are also proposed.
Finance Minister Nirmala Sitharaman has started the Budget 2024 speech exactly at 11 AM. All eyes are now on the budget announcements from the FM particularly on the proposals that can bring relief to the common man.
The time has come for the FM to start the Budget 2024 speech.
The insurance industry's primary recommendations include increasing the maximum deduction limit for health insurance premiums. Recommendations include increasing the limit to Rs 50,000 for the self, spouse, and dependent children, as well as Rs 1 lakh for senior citizen parents. This reform aims to provide more extensive coverage within the health insurance umbrella, responding to people's changing healthcare needs. Presently, the maximum tax benefit on health insurance premiums is limited to either Rs 25,000 or Rs 50,000 depending on age.
Ayushman Bharat Pradhan Mantri - Jan Arogya Yojana (AB PM-JAY) could be the focus for the FM in this budget.
The Centre is likely to hike the insurance coverage amount under the Ayushman Bharat health scheme to Rs 10 lakh from the existing Rs 5 lakh. Around 34.7 crore Ayushman cards have been issued, and around 7.35 crore hospital admissions have been facilitated under the scheme.
Ayushman Bharat Pradhan Mantri - Jan Arogya Yojana (AB PM-JAY) has crossed the milestone of 30 crore Ayushman cards on January 12, 2024.
The flagship scheme being implemented by the National Health Authority (NHA) aims to provide health cover of Rs. 5 lakhs per family per year for secondary and tertiary care hospitalization to 12 Crore beneficiary families. Approximately 181 Ayushman cards are created every minute.
With 4.83 crore Ayushman Cards, Uttar Pradesh tops the list of States with the highest number of Ayushman Cards created. Madhya Pradesh and Maharashtra are at number two and three positions with 3.78 crore and 2.39 crore Ayushman cards respectively. 11 States have more than 1 crore Ayushman card holders.
The common man is looking forward to the FM proposing measures that will make life and health insurance plans more affordable for the average person.
Anup Rau Managing Director & Chief Executive Officer of Future Generali India Insurance Company says making insurance products affordable and accessible to the masses will be crucial to ensure India achieves “Insurance for All by 2047” – a goal set by IRDAI - and this calls for certain tax incentives.
The deduction limit on health insurance premium under Section 80D has remained unchanged for the past nine years despite the fact that there has been a significant rise in healthcare costs across the country.
Interestingly, India, which surpasses South Asian peers with a medical inflation rate of 14 per cent, last witnessed an enhancement in the deduction limit in 2015-16.
It would be best if the limit for medical insurance is linked to inflation and gets revised automatically every year or once in a couple of years.
Also, the benefits need to be extended to the New Tax regime as well since increasing health insurance penetration is critical. So, we hope the upcoming Budget to announce some hike in the deduction limit on health insurance premiums.
The GST for health insurance is currently being charged at 18%, a reduction in GST will go a long way in increasing adoption of health insurance among masses.
FM Nirmala Sitharaman is about to present the Budget 2024 and taxpayers are looking forward to some insurance incentives to be provided in the New Tax Regime.
Insurance buyers also want a reduction in GST rate applied to insurance plans.
Shanai Ghosh, MD & CEO, Zuno General Insurance says the upcoming Budget 2024-25 is crucial for advancing insurance accessibility and inclusivity, in line with IRDAI's 'insurance for all by 2047' vision.
The deduction for health insurance premiums under Section 80D has been constant despite significant increases in healthcare cost, underscoring the need for linkage to inflation and periodic revision.
Extending benefits to the New Tax Regime is essential for increasing health insurance penetration. We also need to encourage property insurance for retail customers and SMEs. Employee Health insurance has emerged as an important benefit and all employers should provide it.
However the GST on the same is not available as an Input tax credit for the employer and is a significant cost, this should be reviewed. Finally, the reduction of GST on health insurance premiums will reduce the cost to the customer and make it more affordable.
Rakesh Jain CEO Reliance General Insurance expectations
Increase the upper limit for tax exemption on health insurance premiums to INR 75,000.
Introduce financial support or tax benefits for extensive insurance on electric vehicles (EVs).
Give tax advantages for cyber insurance, particularly for small and medium businesses, to enhance their ability to withstand cyber risks and data breaches.
Mandate health insurance to all employers for their employees to bring holistic protection to the working class.
India's growing pension and annuity market caters to the aging population's pension needs but exposes investors to reinvestment rate risk in volatile interest rates.
Annuity taxation in the customer's hands reduces product attractiveness. Tax incentives for NPS accumulation may extend to annuities under Section 80CCD (1b).
The sector advocates for equal tax treatment for pension products, similar to the National Pension System, to incentivize retirement planning and ensure a secure financial future.
The current tax rules on annuity income, including capital and interest, need to be changed to make it tax-free, encouraging widespread adoption of retirement products.
The insurance industry proposes a comprehensive review of tax structures under Section 80C, possibly extending the Rs 1,50,000 deduction ceiling and creating an exclusive term insurance exemption category.
The tax benefit and comprehensive coverage plan could boost financial security and insurance penetration in India, with a Rs 50,000 deduction for pure-term insurance premium payments.
The GST rate for health and term insurance needs reevaluation to ensure pricing benefits reach end customers, promoting increased investment in life insurance.
Rakesh Goyal, Managing Director, Probusinsurance.com feels an increase in the limits for the Income Tax Act section 80C is required. Right now, Indians get a tax exemption of Rs 1.5 lakh every year, but it's crowded with various financial products.
We would expect the limit to increase or to establish a separate exemption limit specifically for life insurance premiums. This move would help increase countrywide insurance penetration.
The Supreme Court criticized the government for not setting a price range for certain treatments, prompting the Bureau of Indian Standards to standardize and improve transparency in hospital billing.
The World Health Organization estimates that annually, over 55 million people are reintroduced into poverty due to catastrophic healthcare costs, affecting around 17% of households.
Key Expectations from Rakesh Goyal, Managing Director, Probusinsurance.com
The reduction in the Goods and Services Tax (GST) on insurance premiums is the need of the hour. Currently, GST on insurance premiums is 18 percent, which is considered high and a deterrent for potential policy buyers. If there is a reduction in GST, it will help the industry in a big way.
The policyholders should receive higher tax benefits for their medical insurance. We should raise the limit to Rs 50,000 for self, spouse, and children, and Rs 1 lakh for senior citizens.
Key Expectations from Vaibhav Kumar, SVP & Head -Product Management and E-commerce Channel, Max Life Insurance
Max Life Insurance anticipates the Union Budget to introduce policies enhancing financial security and fostering long-term savings for all Indians, addressing key consumer and life insurance sector issues.
Tax-free annuity payouts could alleviate financial pressures on retirees and ensure a stable income stream, especially for self-employed individuals, by addressing retirement income challenges.
Incentivizing Long-Term Savings and Financial Security: Enhancing Section 80C cap or introducing a life insurance limit could encourage disciplined savings and financial protection, while also providing stability for families.
GST Reduction on Term Insurance and Annuity Products: Lowering GST on term insurance and annuity products could increase access to essential financial tools, providing financial protection to families across the country.
Increased Exemption Limit for ULIPs: Increased capital gains tax exemption in Unit Linked Insurance Plans (ULIPs) could boost equity market investments, promoting financial inclusivity and security.
According to a recent Swissre report, Economic growth, an expanding middle class, innovation and regulatory support is driving insurance market growth in India.
Over the next five years (2024‒28), Swissre forecasts that total insurance premiums will grow by 7.1% in real terms, well above the global (2.4%), emerging (5.1%) and advanced (1.7%) market averages.
At this rate, India will have the fastest-growing insurance sector of the G20 countries. Swissre expects robust growth in life business (premiums up 6.7% in 2024‒28), supported by rising demand for term life cover by the middle-class and the country’s young population, and also increasing industry adoption of Insurtech.
Non-life premiums are forecast to grow by an annual average of 8.3% during 2024‒28, driven by economic growth, improvement in distribution channels, government support and a favourable regulatory environment
India’s vast aging population underlines its burgeoning pension and annuity market. Annuity caters to the key dilemma of a pensioner, for a life-long pension at a steady, guaranteed rate and exposes the investors to a reinvestment rate risk, especially in a volatile interest rate scenario.
Annuities are the only solution, which provides complete protection from the perspective of living longer (i.e. outliving one’s corpus), by providing a regular flow of income throughout one’s lifetime, purchased in lieu of a single lump-sum amount.
Currently, the annuity is completely taxed in the hands of the customer, which reduces the product’s attractiveness.
Also, currently, a tax incentive is offered for people to accumulate corpus in NPS under Section 80CCD (1b ). Subhrajit Mukhopadhyay, Executive Director, Edelweiss Life Insurance expects a similar incentive may also be extended to Annuities.
The big demand from citizens is to increase the Section 80 D limit for health insurance premiums.
Currently, the tax benefit you can claim on the premium paid for a health insurance policy is covered under section 80D of the Income Tax Act, 1961.
However, the maximum tax benefit is limited to either Rs 25,000 or Rs 50,000, with the actual benefit you receive varying based on your age.
If you are under 60 years old and purchasing health insurance for yourself or a family member who is also under 60, you are eligible for a maximum deduction of Rs 25,000 in a financial year. On the other hand, if you are 60 years of age or older, you can claim a maximum tax benefit of Rs 50,000.
It means if you are 60 years or above and want to buy a health insurance plan for yourself and also for your parent, the total tax benefit can be availed up to Rs 1 lakh. The premium paid will bring your gross total income by an equal amount thus lowering your tax liability.
In the realm of insurance sector expectations, both the average citizen and industry experts are hoping for similar relief measures to be announced by the Finance Minister.
The rising medical inflation in the country is putting a strain on the wallets of the common citizens, as their out-of-pocket expenses continue to increase.
According to PwC’s newest research, PwC’s Health Research Institute is projecting an 8% year-on-year medical cost trend in 2025 for the Group market and 7.5% for the Individual market. This near-record trend is driven by inflationary pressure, prescription drug spending and behavioral health utilization.