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Union Budget 2024: Insurers Expect More Tax Benefits For Health Insurance

Union Budget 2024: Insurers Expect More Tax Benefits For Health Insurance

The finance minister is likely to lay out the government’s economic agenda in the budget.

New Delhi:

More tax benefits for health insurance under the new tax regime, relaxation in payment norms for MSMEs and incentives for the agri-tech sector are among the stakeholders’ expectations from the first budget of the Modi 3.0 government.

Finance Minister Nirmala Sitharaman is scheduled to present the full Budget for fiscal 2024-25 on July 23, which will be the first major policy document of the new government.

Anup Rau, Managing Director and Chief Executive Officer of Future Generali India Insurance Company said the deduction limit on health insurance premiums under Section 80D of the Income Tax Act has remained unchanged for the past nine years even though there has been a significant rise in healthcare costs across the country.

“It would be best if the limit for medical insurance is linked to inflation and gets revised automatically every year or once in a couple of years. Also, the benefits need to be extended to the New Tax regime since increasing health insurance penetration is critical. So, we hope the upcoming Budget to announce some hike in the deduction limit on health insurance premiums,” Rau said.

Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, said reforms like offering health insurance to employees at negotiated rates, reducing GST on health insurance premiums, and offering tax benefits like increased Section 80D exemption limits would make health insurance more affordable and accessible, especially for the ‘missing middle’ segment of our population.

“Additionally, for senior citizens, removing the limit on deductions for health insurance premiums would significantly ease their financial burden,” Singhel said.

The finance minister is likely to lay out the government’s economic agenda in the budget.

On expectations from Nirmala Sitharaman’s budget, D S Negi, CEO of Rajiv Gandhi Cancer Institute & Research Centre (RGCIRC), said the focus on reforming cancer care in India is crucial and it is important to prioritise funding for advanced treatments like immunotherapy and personalised medicine, ensuring more patients can access these cutting-edge therapies.

“Extending Ayushman Bharat to those aged above 70 years will be highly beneficial for senior citizens. However, the current coverage limit of Rs 5 lakh may not be sufficient for critical illnesses such as cancer, where treatment costs can range from Rs 15-20 lakh.

“Therefore, it is essential to consider increasing the coverage limit for critical illnesses like cancer to ensure adequate financial support for cancer patients,” Negi added.

The budget is likely to include steps to fast-rack reforms to make India a USD 5-trillion economy in the near future and turn the country into a ‘Viksit Bharat’ by 2047.

Ahead of the budget, Chairman of the Medical Technology Association of India (MTaI) Pavan Choudary said that customs duties and taxes levied on medical devices in India are one of the highest in the world which directly impacts patient affordability.

“On the other hand, countries like Singapore, Hong Kong, Italy, and Norway impose no such duties. Australia and Japan levy only a minimal 0.5 per cent duty, while in the United States, it stands at 2 per cent, and in China at 3 per cent.

“This stark contrast creates risk for illegal imports of medical devices in India that are not backed by legal and service guarantees. Furthermore, such trade would undercut the Indian government’s tariff revenue,” he said.

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, said as per recommendations of Micro, Small & Medium Enterprises (MSMEs), Section 43B(h) in the Income Tax Act was introduced from AY 24-25. However, the alignment of the disallowance for payables under sections 43B(h) of the Act has been made with the MSME Act, which requires that payment has to be made to an SME within a maximum of 45 days.

“This is difficult in the present-day trade where a 60-90 days credit period is the norm.

“In this budget, it is expected that this provision will be relaxed/amended aligning the same with the CGST Act w.r.t. disallowance when payment to SMEs is not made within 180 days. Hence, in case a taxpayer does not pay an SME within 180 days, then the expense may be added back to his income,” he said.

In anticipation of the budget, Saurabh Rai, CEO of Arahas, has expressed high expectations for substantial investments in sustainability and geospatial technology.

“We anticipate significant allocations towards renewable energy projects and incentives for companies embracing green technologies,” he said.

Additionally, Rai said that boosting agri-tech innovations, providing tax incentives for tech companies and investing in human capital development is imperative for driving sustainable growth.

Sanjay Kumar, Founder and CEO of Geospatial World, said that to fully leverage the power of digital twin technology, it is crucial to allocate dedicated funds to it in the Union Budget.

“This allocation will facilitate the widespread adoption of digital twins, driving efficiency gains, cost savings, and improved decision-making in infrastructure projects. By investing in this technology, India can achieve significant long-term benefits, such as enhanced asset management, reduced downtime, and increased resilience to environmental challenges,” Kumar said.

Ms Sitharaman was given charge of the finance portfolio in the second stint of the Modi government after the 2019 general elections, becoming the first full-time woman finance minister in independent India.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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