Budget 2023: Insurance companies demand to increase tax exemption limit

BY A STAFF REPORTER: Ahead of the Union Budget 2023, insurance companies are expecting the Centre to follow through on their recommendations, which include raising the tax exemption limit under 80D of the Income Tax Act. These include issuance of long-term bonds, tax incentives for home insurance premiums, and a separate section to claim deductions for term insurance premiums. These suggestions will help improve the penetration of insurance in the country. Also, another long-standing demand is to rationalise the Goods and Services Tax (GST) on insurance products. For the past few years, insurers have been recommending to the government to increase the tax exemption limit under 80D of the Income Tax Act. Under this section, a person can claim a deduction of up to Rs 25,000 for health insurance premium and health care expenses. A maximum deduction of Rs 50,000 can be claimed under this section if a person pays a health insurance premium for his parents as well. In view of inflation, the current maximum limit may be increased by Rs 50,000 to Rs 1 lakh to induce people to take adequate insurance cover. Rakesh Jain, Chief Executive Officer (CEO) of Reliance General Insurance, said, "The new tax regime should allow deduction of health insurance premium under 80D. "