Insurers Push for Tax Exemptions, Annuity Parity in Upcoming Budget

INSURANCE
Whalesbook Logo
AuthorRiya Kapoor|Published at:
Insurers Push for Tax Exemptions, Annuity Parity in Upcoming Budget
Overview

Life and health insurers are urging the government to increase tax exemptions for premium payments and align the taxation of annuities with other retirement products in the upcoming Budget. Industry leaders believe these changes are crucial to boost insurance penetration, encourage long-term savings, and promote wider adoption of preventive healthcare measures across India.

Insurers Seek Enhanced Tax Incentives

Insurers are presenting a united front, advocating for significant tax reforms in the forthcoming Budget. The core demands include raising the income tax exemption limits for life and health insurance premiums. They also seek parity in how insurance annuities are taxed, aligning them with other pension instruments. This move is seen as vital for channeling long-term savings into retirement products and fostering wider adoption of preventive care.

Boosting Long-Term Savings and Protection

Bajaj Life Insurance MD & CEO Tarun Chugh highlighted that recent policy decisions have strengthened the sector. He specifically called for taxing only the returns on annuity payouts, similar to other pension products, to allow individuals to choose retirement solutions based on suitability rather than tax differentials. J. Gomes, MD & CEO of Ageas Federal Life Insurance, echoed this, recommending a revision of the Section 80C limit or a separate deduction category for life insurance premiums and annuity contributions to encourage long-term savings.

Addressing Protection Gaps and Medical Inflation

Alok Rungta, MD and CEO of Generali Central Life Insurance, pointed out that current tax concession thresholds for life insurance and retirement products are outdated, failing to account for rising incomes and evolving needs. He believes expanding deductions would significantly boost demand for higher-value policies, addressing India's substantial protection gap. For health insurance, ManipalCigna Health Insurance CFO Srikanth Kandikonda urged the Budget to introduce enhanced tax benefits for outpatient department services and preventive screenings. This, he stated, could significantly lower long-term treatment costs amid projected medical inflation of 11.5%-14%.

Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.