The continuing pandemic due to Covid-19 has demonstrated the necessity for health insurance in every household to adequately protect all family members against medical uncertainties. The health segment has surpassed the motor segment in the insurance sector after the pandemic first hit the country in March 2020, leading to an unimaginable surge in medical costs. Given the global spotlight on health insurance, any form of tax exemption for medical/ health insurance policies will greatly benefit insurance customers, as tax exemptions will trigger more interest in buying insurance and increased insurance awareness. In this regard, the following are reasonable expectations from the Finance Minister in the upcoming Budget for the insurance sector:
GST Removal/Reduction: The government should aim to encourage purchase of health insurance so that timely medical aid is available to one and all, as even today, a large part of the population in the country still remains underinsured or uninsured. Particularly, the prevailing high GST rate of 18 per cent applicable on health insurance must be removed, in line with the GST applicable for medical services and hospitals (which is exempt from GST). The GST component of the premium is a disincentive for customers to take much needed health insurance and its removal will lead to increased levels of insurance penetration in the country, given that health insurance is an essential commodity in the present context. This focus should also extend to other forms of insurance beyond health and in promoting a higher adoption of insurance.
This article was originally published in Financial Express on 1 February 2022 Written by: Shailaja Lall, Partner. Click here for original article
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