Budget 2018 – Expectations for The Insurance Sector

Jan 25, 2018 | 1 year ago | Read Time: 2 minutes | By iKnowledge Team

It’s that time of the year again! Expectations and predictions are ringing high in the market as the country prepares itself to receive yet another budget for the coming year. With just a week left before Finance Minister Arun Jaitley reveals the Budget 2018 on February 1st, we can’t help but make our own wish list of things to expect for the insurance sector.

The past one year has been a tumultuous one for India, a year that saw major changes made to the economy. Demonetisation and the rollout of GST were some of the bold reforms by the government that put quite a head spin on the common man.

With a new year and a new budget, we expect and wish for several tax reforms, and relief measures for the common taxpayers. Read on to know what we think is needed for the Indian insurance sector:

Widening the tax slabs for individual taxpayers: The insurance sector seems to be holding their breath for this change to be introduced in the new budget. The existing tax slabs have the minimum exemption for tax is limited to ₹2.5 lakhs. Widening this tax slab to 3 or 3.5 lakhs would provide some relief to small individual taxpayers.

Separate tax clauses for term insurance: Term plans are pure life insurance policies, offered at cheaper premium costs than other market linked insurance plans. However, this policy is being crowded with Sec 80C of the IT Act. What we hope for is a separate tax saving clause (apart from the nominal ₹1.5 lakhs exemption under sec 80C) will draw more people to invest in insurance. Additionally, it will also reduce their tax liability.

Increasing tax deduction limits under Section 80D: Under Section 80D, we are mainly concerned about the tax deductions set aside for health insurance policies. Due to the lack of health insurance plans being purchased, especially in rural parts of the country, special care should be given to provide tax benefits for these schemes. Currently, health insurance plans offer a tax deduction of up to ₹25,000 for individual taxpayers. For senior citizens, the deduction limit offered is ₹30,000. Increasing these limits would encourage more people to secure themselves from medical bills and hospitalization costs.

It is only a matter of a few days until we find out what Mr. Arun Jaitley has in store for us. Let’s hope for good things, and a brighter future.

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