Like several other industries, the insurance sector has high expectations from the upcoming Union Budget 2025–26. Insurance sector stakeholders, including middle-class taxpayers, are hopeful that FM Nirmala Sitharaman will announce some tax relief measures, like higher 80D deductions and a GST cut on health insurance, on February 1, when she presents the Modi 3.0 government’s second full-fledged budget.
Ahead of the mega economic event, stakeholders from the insurance industry have outlined their expectations. They have also sought several other reforms that could boost affordability and innovation in the sector.
Experts believe these measures will play a pivotal role in achieving the government’s ambitious “Insurance for All by 2047” vision, as also outlined by the Insurance Regulatory and Development Authority of India (IRDAI). Here are some of the key demands the insurance sector and middle-class taxpayers have made to the government.
Reducing GST on health insurance
Dhirendra Mahyavanshi, Co-Founder and CEO of Turtlemint, praised the government and IRDAI for their initiatives but highlighted the pressing need to reconsider the 18% GST on health insurance policies. “Introducing tax relief measures for annuity and pension products and prioritising rural insurance accessibility will enhance affordability for the middle class and encourage broader adoption of insurance,” he stated. These measures, he emphasised, would also contribute to advancing financial inclusion and retirement savings.
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Calls for higher Section 80D Deduction limits
Anup Rau, MD & CEO of Future Generali India Insurance Company, said there is a need to hike the deduction limit under Section 80D, which has remained unchanged since 2015-16. India’s medical inflation rate stands at 14%, yet deduction limits have not been revised, he added.
“Linking these limits to inflation and extending benefits to the New Tax Regime could significantly boost health insurance penetration,” Rau suggested. He also advocated removing GST on health insurance to make coverage more affordable and reduce the government’s burden by enabling private sector-led solutions.
Increased healthcare spending: The need of the hour
Srikanth Kandikonda, CFO of ManipalCigna Health Insurance, underlined the necessity for higher public healthcare expenditure. “The National Health Policy proposes increasing healthcare spending to 2.5% of GDP by 2025, but we’re still striving for Universal Health Coverage,” he noted.
Kandikonda also called for raising Section 80D deduction limits to Rs 50,000 for all and Rs 1 lakh for senior citizens, citing rising healthcare costs and the need for higher sum insured coverage. “This is crucial for reducing the financial burden on families and achieving the vision of ‘Insurance for All by 2047’,” he said.
Bridging the protection gap through innovation
Naveen Chandra Jha, MD & CEO of SBI General Insurance, highlighted the consistent growth of health insurance in India, with an annual increase of approximately 25% over the past three years. Budget 2024 presents an opportunity to strengthen health insurance accessibility, simplify tax benefits, and foster innovation, he said.
He also pointed to initiatives like Bima Sugam, which aims to bridge the protection gap and achieve universal healthcare coverage. “Expanding access to underserved regions through public-private partnerships, subsidies, and digital advancements can empower insurers to create a healthier, more secure India,” he added.
Industry’s vision for a Viksit Bharat
As India’s insurance sector gears up for its most significant reforms yet, experts agree that Budget 2024 is a pivotal moment to address affordability and accessibility. By implementing targeted measures such as GST reduction, higher tax deductions, and increased public healthcare spending, the government can catalyse the sector’s growth and pave the way for a financially inclusive and healthier Bharat.