Insurers Demand Higher Tax Exemptions on Health Insurance Premiums & Separate Exemptions for Life Insurance

The 2023 Budget is all set to be announced by the Finance Minister, Nirmala Sitharaman on February 1, 2023. Ahead of the big announcement, different sectors including insurance are waiting for certain amendments to the existing tax structure so that the tax liability is reduced. As of now, as per the Income Tax Act of 1961, a maximum tax deduction of Rs. 1.5 lakhs can be availed on different financial instruments such as life insurance premiums, health insurance premiums, and more.

As the budget is soon to be announced, insurers are expecting the finance ministry to raise the quantum of tax deductions and provide greater tax benefits. The demand is to increase the tax deductions on health insurance premiums, and tax benefits on home insurance and annuity income. Furthermore, the demand is also to have separate tax deductions for life insurance premiums. The reason behind this is that many individuals prefer buying life insurance plans for tax savings, however, this motive narrowed as the number of investment options under Section 80C has increased. 

Even the MD and CEO of Ageas Federal Life Insurance, Vighnesh Shahane, expressed how section 80C has a number of financial tools. In light of the same, there is no denying that there is a dire need to revise the existing tax deductions. Thus, insurers are eagerly waiting for the announcement of Budget 2023 to see whether their demands are met or not.

Also read: 18 New Insurance Companies are in the Pipeline for IRDAI approval