Life Insurance Sector Urges FM To Lower GST To Boost Accessibility
The life insurance sector, in particular, is expecting the finance ministry to consider lowering Goods and Services Tax (GST) on insurance products
Finance Minister Nirmala Sitharaman is all set to present the Union Budget 2024 on Tuesday. All eyes are on her to provide relief to taxpayers in different sectors. The life insurance sector, in particular, is expecting the finance ministry to consider lowering Goods and Services Tax (GST) on insurance products.
"Reducing GST on term insurance plans and considering 'zero rating' for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and micro insurance products will make them more affordable and accessible for the masses," said Rushabh Gandhi, MD & CEO, IndiaFirst Life Insurance.
He also added that there should be a separate tax deduction for life insurance premiums and an extension of the 10(10D) benefit to annuities to encourage retirement planning and provide tax relief to senior citizens.
While Gandhi worried about introducing a composite license for insurers to empower them to sell life, non-life, and health insurance products, Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, requested the ministry to introduce long-term capital gains taxability for all high-value traditional life insurance plans (more than Rs 5 lakhs aggregate annual premium), in line with high-value ULIPs. "This will bring uniformity and tax efficiency for insurance customers at par with other similar financial products in the market," said Chugh.
Life insurance players are also expecting separate savings for life and health insurance. "Changing tax sections 80C and 80D to provide separate tax breaks for the life-threatening risk part of term life plans could help close the gap in death risk coverage and enhance social security," said Satishwar B, MD and CEO, Bandhan Life.
To increase savings under annuity plans to benefit both retirees and the industry, the government should simplify or remove taxes for these products, encouraging more people to invest in these important financial protections. "Pension policies, like the NPS, provide a steady income in retirement. It's important to lessen the tax load for people receiving pensions from the National Pension System (NPS), as the retirement fund gap is expected to increase significantly. The current Rs 50,000 tax exemption for NPS under Section 80CCD(1B) should also apply to pension and annuity plans provided by life insurance companies to encourage more people to use them," explained Satishwar B.
