Budget 2021 Expectations: Do govt needs to relook at tax relief, FDI on health insurance?

Budget 2021 Expectations: Do govt needs to relook at tax relief, FDI on health insurance?

Union Budget 2021-22 Expectations for Insurance: The coronavirus pandemic has caused the government’s consideration towards the healthcare sector. The expenditure on healthcare, fitness, and other related discussions have become the epicenter of policy decisions since the pandemic hit India. Even before the pandemic, health coverage was a growing sector, however, the pandemic has established the indispensable nature of having a safety net when it becomes towards the healthcare costs. This, on other hand, has also increased the need for tax impetus on individual’s expenditure on health outcomes. 

Tax change on insurance

“It becomes important to increase the limits established for mediclaim premium tax reduction under section 80D of the Income Tax Act to Rs 1 lakh (Rs 50,000 for self & spouse + Rs 50,000 for Parents),” said Mayank Bathwal, CEO, Aditya Birla Health Insurance. It is also important to reintroduce the medical reimbursement with a higher border of Rs 50,000 tax deduction, which got mixed in standard deduction during the finance budget 2018, Mayank Bathwal attached. 

Increasing FDI exceeding 49%

The impact of the coronavirus in the year 2020 has also affected many Indian promoters to face challenges, which has significantly influenced the growth and development of the insurance sector. However, foreign promoters are in a relatively better position to improve their stakes beyond 49 percent but are forced by the regulatory restriction of foreign investment limit.

“While Indian Promoters of insurance companies, including banks, are at different platforms of their return to normalcy, an increase in the FDI in the insurance sector exceeding 49 percent would immediately help the strong growth of the insurance industry and move it to the next level,” Rakesh Wadhwa, CMO, Future Generali India Life Insurance, recognized Financial Express Online. Especially in life support, which is capital intensive, it would benefit the insurance companies to come back on track vis-à-vis their strategic plan, Rakesh Wadhwa added. Enhancing FDI beyond 49 percent at this juncture will, consequently, be a step in the right direction, he further stated.