GST rate cut from 18% to 5% on the health insurance premiums will be a huge respite especially for senior citizens who are struggling to meet the rising healthcare costs
FinTech BizNews Service
Mumbai, January 31, 2024: As budget 2024 is round the corner, Prasun Sikdar, MD & CEO, ManipalCigna Health Insurance, has penned down his budget wishlist for year 2024 for health Insurance Industry: “The rising cost of healthcare services and overall medical inflation in the country have made health insurance an absolute necessity. Access to health insurance can help more people become part of the health care system and get access to quality treatment. Thus, we are hopeful in the upcoming Union budget the government looks at considering 5% GST tax slab on health insurance premium to make it more affordable for the people living in the middle-income group to get access to quality healthcare care they need. GST rate cut from 18% to 5% on the health insurance premiums will be a huge respite especially for senior citizens who are struggling to meet the rising healthcare costs. At present, on most insurance products the GST is 18% which thrusts the premium to 118% for the end-user. The abolition or at least a sizeable reduction in the GST on all personal lines of products – from the existing 18% to 5% will encourage more people to buy health insurance.
Currently, a policyholder can avail a tax exemption of Rs. 25000 deduction per financial year under 80D for buying a health insurance policy for self, spouse or dependent children. This exemption can increase if the health insurance cover includes parents. To help boost the overall health insurance penetration in the country and help millions of people access quality healthcare at an affordable cost, the increase in the limit of tax deduction in 80D can act as an incentive to ensure health insurance reaches the last mile, and to provide people long term financial security.
Also, there has been an extraordinary increase in the incidence of critical illnesses in the country, where the cost of treatment for such diseases is a curse for people living in the lower and middle-income group. And it is a fact that one major illness in the family can drain entire savings, and can push the family into a debt trap. Hence, this definitely calls for a higher tax deduction limit for health insurance plans.”
