It said, “No GST/Tax on Term/Pure Life Insurance and health insurance premiums. In line with NPS, a separate deduction for life/health insurance in the new/old tax regime, say Rs 25,000/50,000. All the government-sponsored pension schemes, APY, PM-SYM, PM-KMY, and NPS-Traders may be brought under one umbrella.”
The report highlighted that with the insurance penetration in India declining to 3.7 per cent in FY24, compared to 4 per cent in FY23 and 4.2 per cent in FY22, urgent measures are needed to achieve the Insurance Regulatory and Development Authority of India’s (IRDAI) mission of “Insurance for All by 2047.”
Life insurance penetration has seen a sharper decline to 2.8 per cent, while non-life insurance remained stagnant at 1 per cent.
To address this concern, the report noted that the government could consider exempting GST and taxes on term and health insurance premiums, encouraging more individuals to invest in these essential covers.Additionally, introducing a separate tax deduction for life and health insurance premiums under both the old and new tax regimes, amounting to Rs 25,000-Rs 50,000, could incentivize policy adoption further.Integrating government-sponsored pension schemes, such as Atal Pension Yojana (APY), Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), Pradhan Mantri Kisan Maan-dhan (PM-KMY), and the National Pension Scheme for Traders under one umbrella, could enhance accessibility and effectiveness.
A special insurance program for MSME employees is also needed to provide social security and income protection for families. An additional scheme for MSME promoters to cover business losses due to uncontrollable factors is also recommended.
In the healthcare sector, India must aggressively increase its public spending on healthcare. The National Health Policy 2017 set a target of allocating 2.5 per cent of GDP to healthcare by 2025; however, report suggested increasing it to 5 per cent to meet the needs of the growing and ageing population.
Allocating proceeds from healthcare cess and imposing a proposed 35 per cent GST slab on tobacco and sugary products could fund public health programs.
Lastly, rationalizing GST rates on medical devices to a uniform 5 per cent-12 per cent, instead of the current range of 5 per cent-18 per cent, would simplify compliance, enhance efficiency, and reduce costs for manufacturers and distributors.
These measures could help strengthen India’s insurance and healthcare infrastructure, fostering economic growth and social security for all citizens.
