With the Union Budget 2025 approaching, Rajiv Gupta, President of PB Fintech, outlined key expectations to advance the insurance sector’s goal of achieving universal coverage by 2047. Gupta emphasized the importance of tax reforms to drive financial security, enhance affordability, and promote long-term financial planning.
“Tax incentives have been instrumental in driving insurance penetration all these years. Innovative tax reforms in this Budget can serve as a catalyst for creating a financially secure and insured India,” Gupta stated.
He recommended introducing a separate tax exemption category for term insurance, as the current Section 80C deduction limit of ₹1.5 lakh often gets exhausted due to overlapping investments. This measure, Gupta argued, would incentivize Indians to secure their families with adequate life coverage, reducing dependency on welfare schemes and offering long-term fiscal benefits.
Highlighting affordability challenges, Gupta called for a reduction in the 18% GST rate on insurance premiums, which has historically been a deterrent for low-income groups. Additionally, he proposed increasing the health insurance deduction limit under Section 80D to ₹50,000 for individuals and ₹1 lakh for senior citizens. He also advocated for tax exemptions on contributions to Health Savings Accounts, enabling better management of rising healthcare costs.
For retirement planning, Gupta urged the government to align the taxation of pension and annuity products with the National Pension Scheme (NPS), recommending tax exemptions for annuity income. “Currently, the full taxation of annuity income together with the principal is a major hindrance. Exempting annuity income will encourage wider adoption of retirement planning products and reduce future burdens on government-sponsored pension programs,” he noted.
Gupta concluded by emphasizing that these reforms, while potentially reducing short-term revenue, would foster long-term fiscal stability, promote wider insurance adoption, and enhance financial security for Indian households. The insurance industry eagerly awaits Budget 2025, hoping for transformative measures to align with the nation’s vision of universal insurance coverage.
