Like any other sector insurance sector also suffered the blows due to demonetisation due to which money saw its channnelisation in illegal areas but as the Union Budget 2018 is likely to be a populist budget it pins hopes on section 80 C limit enhancement to atleast Rs. 3 lakh with a separate segment for deductions allowed in respect of insurance premiums, rationalization of GST rates, better investment norms.
Here' we discuss each of the proposals by the industry:
Section 80C limit enhancement with a separate segment for insurance premium deduction:
To encourage savings and hence purchase of insurance policies, a deduction in respect of premium paid is allowed under Section 80C. Not only this other expenses are also covered as the expenses such as principal towards housing loan, tuition form the part of Rs. 1.5 lakh 80C limit.
But in its pre-budget expectation, the industry mulls to create a separate 80C limit over and above the current and with a separate head for insurance premium.
Investment norms for better returns: Last year, the government in its EPS scheme was considering to split into 2 accounts with the new one that provides returns linked to ETFs.
This year on similar lines, the industry intends to limit exposure in G-securities and instead move the funds to more lucrative equity segment.
GST rate rationalization: The higher GST of 18% is proving quite burdensome for insurance buyers which previously stood at 15%. The industry expects its rationalistation.
In the previous service tax was payable only on the risk component of the premium while the investment portion did not levied any tax.
Now, it is to be seen to what extend the Budget 2018 augurs well for the insurance industry and insurance buyers.