Experts and analysts in the industry state that 18% of GST on insurance premiums is at the upper spectrum. Lowering this could bring relief while giving a boost to insurance penetration. In a dynamic environment that is the breeding ground for health services to take shape, the need for health insurance is expected to rise by leaps and bounds. However, the premium charged on any given plan plays a pivotal role in a client’s decision to purchase health insurance. The premium rate obviously increases with the 18% GST addition, thus hindering the motivation of people to opt for good health insurance plans. In the times we live in, health insurance is not a choice, but a necessity. Experts from the sector suggest a change in GST, making it 5% instead of 18%, and this would encourage individuals to select better policies, rather than low-end ones.
Tax incentives could very well be a draw for novice investors of life insurance, giving the industry a further push in the right direction. Moreover, in the sector of life insurance, only a third of Indian women opt for this, and lower premiums cut down by lowering GST could account for more affordability by women. The masses of India who are prone to buying term-related products need this GST rationalisation so that they can purchase security-related instruments with ease. Furthermore, double taxation and such anomalies in the case of payments of annuity can be well-addressed in the budget. Relief is much-sought in annuity payments as they relate to senior citizens. This is true as far as having a reduction in capital gains is concerned while buying annuity. Tax shouldn’t be the main source of concern for people in the golden era of their life and double taxation occurs with annuity. The more people opt for insurance products, the easier it is on the government, and this can only be achieved by reducing tax on these instruments.