The insurance industry is seeking cuts in GST, increase in 80C investment limit in Budget 2022

The insurance industry is recovering from an extraordinary year in which life insurance claims rose sharply due to the Covid-19 pandemic. The increase in claims and the accompanying payments that both life insurance companies and health insurance companies faced this tax payment has led to a steep 30% increase in premiums as reinsurance companies seek to recover their losses. Although insurance premiums in India are still lower compared to many markets, the large premiums can affect the demand at a time when the awareness of life and health insurance is high. The insurance industry has asked to rationalize GST and increase the investment limit for buying insurance.

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BUDGETARY RECOMMENDATIONS

  • Reduce GST on insurance to 5% from 18% at present
  • Increase the investment limit of 80 C to 2 lakh Rs to allow people to buy insurance; the current limit of 1.5 lakh Rs is low and includes several options
  • Make annuity tax free
  • Double health insurance limit according to section 80D to Rs 50,000 in light of higher medical expenses according to Covid
  • Correct the tax anomaly between pension schemes and NPS – pension schemes from insurance companies are not entitled to the additional tax deduction of Rs 50,000 available to NPS under Sec 80CCD (1b).

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