Insurers urge for higher 80C investment limit in Budget 2022

Life insurance is a long-term solution, unlike other financial products which have a shorter investment horizon and are covered under the 80C provision.

Insurance companies are urging to separate deduction limit of Rs 1 lakh for insurance premium payment under Section 80C of the Income Tax Act in the upcoming Union Budget to bring in more people under the bonds of insurance.

The insurers urge to drop in the goods and services tax (GST) rate of 18% presently applied on health insurance products to 5% to make such products more affordable to common people.

“The industry has long-pending expectations from the policymakers for incentivizing people to get life insurance by giving a separate deduction limit of minimum ₹1 lakh for insurance premium payment under Section 80C,” Tarun Rustagi Chief Financial Officer Canara HSBC OBC Life Insurance said to PTI.

Life insurance is a long-term solution, unlike other financial products which have a shorter investment horizon and are covered under the 80C provision. Currently, all financial investments are underneath the same IT deduction section (80C) capped at ₹1,50,000. Finance Minister Nirmala Sitharaman will demonstrate the Union Budget for 2022-23 on February 1.

As of March 2021, the non-life insurance penetration stood at barely 1 per cent. Insurance penetration in the country is at 4.2 per cent of the GDP from a global average of 7.4 per cent according to IRDAI’s Annual Report-2020-21.
Moreover, direct and indirect tax sops, primarily for cushioning from the pandemic impact has also been into consideration by the industry to improve penetration and increase the speed of insurance influence.

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