Tax exemption for home insurance option in the Union Budget 2022

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The dynamic healthcare environment has been a catalyst driving demand for health insurance in India. Today, insurance has become a daily necessity to be fully protected against unforeseen contingencies. 

As a result, insurers believe that it becomes even more important to provide the insurance industry with much-needed impetus with the measures below to continue to protect both the economy and society from the risks. Unforeseen risks: 

1) In terms of direct personal taxation, the government should exempt those who choose to purchase home insurance. So, “give them much-needed impetus, especially in light of the proliferation of natural disasters that keep people stranded.”

This can be done by providing a differential limit in addition to the 80°C limits that have been skewed,” said Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance. 

2) In terms of indirect taxes, the government needs to directly reduce the GST rate on insurance premiums due to the low penetration of insurance in India and the fact that insurance is intended to provide financial support against sudden loss of life or economy

3) Parametric insurance (index-based scheme) should be introduced to indemnify the insured for losses caused by catastrophic events.

Premiums can be collected with property taxes and when a claim arises, the amount claimed is transferred directly to the insured’s Jan Dhan account linked to their home policy. 

4) The government should introduce a universal health insurance scheme as has been done in Jammu and Kashmir to be implemented in all states/TUs in India including all citizens of the region instead of some people. 

5) Following the introduction of GST, the industry received various correspondence from various government agencies requesting information regarding specific issues. “This makes it administratively difficult for large units to respond to several authorities on the same question.

This can be eliminated if a ‘joint review body’ is established for companies with a presence across India with revenues above the regulatory threshold,” said Singh. 

6) Covid has emphasized the importance of protection and savings, so the budget can provide additional tax benefits for protection and retirement products.

As the recovery in private consumption is still slow compared with at pre-pandemic levels, some financial support could be provided for 4044 private consumption, particularly for the automotive and durable segments 

“Overall, due to the impact of Covid, the budget deficit has been increasing, and the government will need to focus on a roadmap to bring the deficit back to pre-Covid levels.

I believe a few of these solutions will go a long way in improving the life expectancy of Indians and will enhance the financial and economic stability of our country,” Singh said.

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