In anticipation of the upcoming interim budget for 2024, the insurance sector is voicing its expectations, with a particular focus on lowering the Goods and Services Tax (GST) rate on health insurance products. Industry experts are calling for a reduction in the GST rate to make health insurance more affordable and encourage a higher adoption rate among the Indian population.
Speaking to a media portal, an industry expert highlighted the current 18% GST rate, stating that it "does not make the product more affordable." Emphasizing the crucial role of health insurance in building a healthier India, the expert explained that affordable health insurance is essential for increasing access to healthcare and ensuring a certain level of healthcare spending.
The industry expert proposed two key recommendations on behalf of the insurance sector. Firstly, advocating for a lower GST rate on health insurance to make it more affordable and incentivize more people to invest in health coverage. Secondly, the expert suggested a zero percent GST rate specifically for senior citizens, considering the importance of making health insurance more accessible to this demographic.
The expert pointed out that an 18% GST rate makes health insurance more expensive than necessary, especially when healthcare services themselves are tax-exempt. The appeal to lower the GST rate, or potentially make it zero percent for senior citizens, aims to align the cost of health insurance more closely with the overarching goal of promoting a healthier nation.
Furthermore, the expert highlighted the ongoing challenge of building insurance awareness in India. Recognizing that insurance awareness is still evolving in the country, the expert emphasized the role of tax incentives, stating that they encourage people to purchase health insurance.
With the Budget session of Parliament commencing on January 31 and Union Finance Minister Nirmala Sitharaman set to present the interim budget on February 1, the insurance sector's recommendations are timely. The industry hopes that the budget will address these concerns, promoting both affordable health insurance and increased awareness of the importance of insurance in India. As the last session before the general elections expected in April-May, the interim budget is expected to address the fiscal needs of the intervening period until a new government is formed. A meeting of floor leaders from various political parties in both Houses of Parliament is scheduled to discuss these matters, highlighting the significance of the upcoming budget session for the insurance sector and the overall health of the nation.
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