Interim Budget 2024: Life Insurance Sector Demands Distinct Tax Deduction Limit Apart From 80C

New Delhi: As Finance Minister Nirmala Sitharaman is all set to present the Interim Budget 2024 in Parliament on February 1, several sectors have pinned high hopes from the upcoming Budget.

The life insurance industry hopes for a distinct tax deduction limit, specifically for life insurance, with a special emphasis on the term insurance category, apart from the existing 80C provisions. 

"This would serve as an incentive for individuals to invest in life insurance policies and promote a sense of long-term security. There could be an opportunity to also re-look at the taxation framework surrounding Pension and Annuity Products. An extension of the current Rs 50,000 tax exemption, applicable to the National Pension Scheme under Section 80CCD(1B), to encompass pension and annuity plans offered by insurance companies, could make retirement planning more attractive and accessible, encouraging individuals to opt for insurance-based pension and annuity products. These changes would also create a more level playing field, fostering healthy competition within the industry," Pankaj Gupta, MD & CEO, Pramerica Life Insurance said.

Gupta said that even though the upcoming budget is a Vote on Account, the insurance sector sees continuation of the infra capex and self-dependency themes.

"Looking at the economy more holistically, the enduring commitment to the 'Make In India' initiative of the government will help increase capital expenditure and also help improve long-term productivity. Capex as a part of total spending has risen from 12% in FY20 to 22% in FY24. With private capex recovery still in the incipient stage, the government is likely to persist in its focus on capex. We are expecting a year-on-year growth of 20-25% in FY25," Gupta added. 

"Importantly as it’s a Pre-election Interim Budget, the focal point would continue to be upliftment and growth of the bottom of the pyramid by way of announcing some welfare measures on rural / Agri schemes. Overall, we expect the budget to give the requisite structural push for economic growth,” Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance Company Ltd said.

Sharad Mathur, Managing Director & Chief Executive Officer, Universal Sompo General Insurance Company Limited said, "To fulfil the vision of ‘Insurance for All by 2047’, it will be crucial to improve insurance awareness among the masses and encourage citizens to enhance their insurance coverage. While IRDAI’s Bima Vahak, Bima Vistaar and Bima Sugam initiatives are indeed great and touted to give a big fillip to the insurance inclusion objective, extending further tax benefits on the purchase of insurance products should greatly support achieving the objective."

 Anuj Parekh – Cofounder and CEO at Bharatsure said that nearly 90 crore Indians are today without a health insurance. He added that  providing tax incentives or subsidizing the cost of insurance can go a long way to ensure the country is secured.