The Union Budget 2022-23, which will be presented by the Union Minister of Finance Nirmala Sitharaman on February 1, 2022, pins hope from many sectors and common people. In the previous budget, the main focus of the government was on health and rural infrastructure development. this year also, the government is expected to make many important announcements to strengthen the economy and empower the common people. However, the Omicron variant of COVID-19 has raised concerns amid the economic recovery in the economy.
The lessons learned from the COVID-19 pandemic underline that capitalizing on health is no longer optional. Stable, equitable, thriving, and peaceful societies and economies are only possible when no one is left behind. With the upcoming budget, this crisis has presented an opportunity to prioritise and bring forth structural changes that benefit the population.
To further give a boost to health insurance and its deeper penetration in the country and share his expectations from Budget 2022 on the insurance sector, Anup Rau, MD & CEO, Future Generali India Insurance urges the government to consider these changes:
GST Reduction from 18% to 5%: In the order of needs, protecting health is of utmost importance, and due to the looming pandemic, health insurance is more relevant than ever. Health insurance is an essential commodity and needs to be slotted in the 5% GST tax slab to make it more affordable to access quality healthcare. A significant reduction in the GST on all personal lines of products from the existing 18% to 5% will encourage more people to buy health insurance. For senior citizens, it should be exempted.
Increasing the limit for Health Insurance under Section 80D: The increase in tax deduction limit in Section 80D of the Income Tax Act can further help in the penetration of health insurance. Under Section 80D, an individual can claim up to Rs 25,000 deduction for self and family. This limit should be increased to Rs 1,50,000. The rising medical costs and the increase in the incidence of critical illnesses make it an unmanageable expense for middle-income and lower-income groups. So, a higher tax deduction limit for health insurance plans is the need.
Small ticket insurance products: Given the under-penetration of insurance in India and the need to bring a wider gamut of the population under the safety net, small ticket size insurance products like micro-insurance, sachet products, etc. can be exempted from GST. This will provide added boost to these products by making them affordable thereby enabling the population to get exposed to low-cost insurance products and appreciate their value better.