Tue Jan 14 12:35:52 UTC 2025: ## Indian Insurers Seek Tax Breaks in Union Budget Wishlist

**New Delhi, January 14, 2025** – India’s insurance sector is anticipating significant reforms in the upcoming Union Budget 2025-26, with insurers seeking tax benefits for policy buyers and incentives for sales to boost the country’s relatively low insurance penetration.

According to the Insurance Regulatory and Development Authority of India (IRDAI), insurance penetration stood at a mere 3.7% in 2023-24, down from 4% the previous year. Life insurance penetration specifically dipped to 2.8%. However, a Swiss Re report projects India to become the G20’s fastest-growing insurance market over the next five years, with an average annual premium growth of 7.3%.

Industry experts are calling for several key measures in the budget. These include reducing GST rates on health insurance, increasing tax exemptions on insurance policies, and rationalizing capital gains tax. Incentives for rural insurance and allowing greater technological flexibility in plan creation and distribution are also sought. Furthermore, increasing the Section 80D deduction limit for health insurance premiums, which hasn’t changed in a decade, is seen as crucial. Proposals also include a dedicated tax deduction for life insurance premiums under Section 80C and revisions to income tax slabs.

The government is urged to consider budgetary allocations for recapitalizing public sector general insurance companies, given their weak solvency positions. Several industry leaders emphasized the need for strategies to incentivize participation and bring more people into the insurance market, particularly those with lower-income levels.

The Swiss Re report highlights that macroeconomic factors, digitalization, and supportive regulation are driving the expected growth. As of March 31, 2024, India had 26 life insurers, 25 general insurers, and numerous other insurance entities registered. The overall positive outlook for the sector rests on the expectation that the upcoming budget will address the concerns of insurers and propel the market towards its goal of “Insurance for All” by 2047.

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