In pursuit of the ambitious vision of ‘Insurance for all’ by 2047, the Insurance Regulatory and Development Authority of India (IRDAI) looks to the upcoming interim Union Budget for critical support. The government is expected to introduce key measures to encourage citizens to embrace adequate life, health, and property insurance. Here are five tax breaks that can play a pivotal role in making this vision a reality:
1. Incentivising Health Cover for First-time Buyers: To address India’s burgeoning population and promote basic universal health coverage, the government can announce tax exemptions for first-time medical insurance buyers. An exemption under chapter VIA, initially set at 200 percent of the premium paid, can gradually align with the threshold under section 80D over a phased period.
2. Reducing Mortality Protection Gap for Youngsters: Introducing a special exemption under Section VIA for individuals below 30 years old who purchase insurance digitally can boost the participation of the young working population. Additionally, a threshold-based tax exemption for term insurance and annuity products could further reduce the mortality protection gap.
3. Uninsured Vehicles on Roads: With over 50 percent of vehicles in India still uninsured, the government can incentivize owners by offering a one-time tax exemption for renewing their insurance policies. This step aims to address the issue of uninsured vehicles on roads, promoting responsible ownership and compliance with compulsory third-party insurance.
4. Protecting Homes Against Natural Catastrophes: To counter the rising incidents of natural calamities, the government can introduce a separate deduction limit of up to Rs 25,000 against property insurance premiums. Additionally, directing the Real Estate Regulatory Authority (RERA) to make home insurance compulsory for homeowners during property transactions can ensure widespread coverage against natural disasters.
5. Exempting Travel Insurance Under LTA: Recognizing the significance of travel insurance, the budget can include premiums paid towards travel insurance as exempt under the Leave Travel Allowance (LTA). This move encourages individuals to safeguard their travel plans, providing coverage against various uncertainties, including flight delays and cancellations.
With these strategic tax breaks, the Union Budget 2024 has the potential to lay down a framework for a more inclusive and robust insurance landscape in India, aligning with the vision of ‘Insurance for All by 2047.’
