Union Budget 2023-Insurers seek cut in GST to 5% on health cover

Reduction of GST on health cover to 5 per cent, hike in 80D limit and tweaking of norms on pension/annuity products to make them more attractive to people top the wishlist of insurers for the ensuing budget 2023-24.

“In spite of the pandemic, the health insurance penetration in our country is very low. Due to such a low coverage, the cost of insurance becomes high. In order to bring down its cost, GST rate should be reduced to 5 per cent from 18 per cent,” Rakesh Jain, CEO, Reliance General Insurance told businessline. 

Currently, health insurance premiums paid to cover individual members are allowed a deduction ranging from ₹25,000 to ₹50,000. In view of inflation, the current limit of maximum of Rs.50,000 may be increased to Rs.1,00,000 in order to encourage people to take insurance coverage, feel the insurers. 

“The insurance industry wishlist has largely been the same for the last 4-5 years with the aim of driving insurance penetration in the country," Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance said. “To increase the penetration of pension and to make India a pension society, especially since we don’t have any social security cover, our request is to make pensions tax-free in the hands of the customer because the pension premium is already paid through taxable income," he added.  

The insurers recommend that the proceeds of the pension/annuity should be made tax-free in the hands of the customer or to allow deduction for the principal component. “Alternatively, if we could have a separate bucket for pensions in the range of Rs.50,000-75,000 it would help to level the playing field with NPS," Shahane said.

According to Srikanth Kandikonda, CFO, ManipalCigna Health Insurance, an increase in the limit of tax deduction in 80D can help boost the overall health insurance penetration in the country. Currently, under 80D, an individual can claim up to Rs.25,000 deduction for self and family, this limit should be increased substantially, Kandikonda said. “We expect the government to announce initiatives to increase the limit for health cover under section 80D and GST rate cut, to help millions of people access quality healthcare at an affordable cost," he added.