Budget wishlist: Insurance regulator seeks doubling of I-T exemption limit under 80D

As the countdown to Union Budget 2021 begins, various sectors have started lining up their wish list around what they would want to see becoming a part of Finance Minister Nirmala Sitharaman’s big address.

The insurance sector also has its hopes pinned. According to sources the insurance regulatory body, IRDAI has already submitted its wish list for the sector with the Finance Ministry. Sources add that IRDAI has suggested certain reforms to enhance coverage in the health insurance space.

According to sources, IRDAI has sought enhancement of Income Tax (I-T) exemption limit under Section 80D on health insurance premium. As per the proposal, the request has been to double the I-T exemption limit on health insurance premium to up to Rs 50,000 for individuals from the current Rs 25,000. Also, the I-T exemption limit has been sought to be raised to Rs 1 lakh for senior citizens from the current Rs 50,000.

Health insurance premium in H1FY21 has occupied the top slot in the general insurance segment with a share of approximately 30 percent. The growth seen in the health insurance segment stood at a strong 16 percent in the above mentioned period.

For a business that thrives on medical uncertainty, COVID-19 pandemic has provided a shot in the arm for the health insurance industry in India. To capitalise on this, IRDAI feels any further incentive in the form of I-T exemption will help widen the health insurance coverage in the country at a much faster speed.

Another request made by IRDAI is to premium a separate I-T exemption window of Rs 10,000-15,000 for property insurance premium. Currently, there is no I-T exemption provided on property insurance premium.

Property insurance refers to a series of policies that offer either property protection or liability coverage. Property insurance can include homeowners insurance, renters insurance, flood insurance, and earthquake insurance, amongst other policies.

According to Vivek Chaturvedi, Chief Marketing Officer and head of online sales at Digit Insurance, the adverse impact observed from the recent natural calamities that stuck in different parts of India has not only boosted the demand of having property cover but also has increased a lot of awareness on the need for such insurance cover at such distressing times.

According to industry experts, the insurance regulator, in the recent past came across several instances of residential as well as commercial properties getting damaged in natural catastrophes, leaving the entire burden of the loss on the owner. This has been the primary reason why the insurance regulator wants to enhance the coverage of property insurance in the country.