In India, Life Insurance as a percentage of GDP stood at 3.3% against the global average of 6.4% in 2016. From budget 2018, we expect some of the measures that may result in deepening financial inclusion in our country:
1. In India, annuity products are taxable and hence, unattractive compared to other investment options. If annuity from maturity of Pension funds is made tax free under section 10(10A) of the Act or a standard deduction/ threshold / slab limit on the same is assigned based on income and ages – the middle class would be initiated towards making a long term investment under pension schemes.
2. Health and protection needs of the lower middle class and weaker sections of society have been largely unaddressed. If a separate Tax deduction for Life and Health Insurance u/s 😯 other than section 80C & 80D is given, it would help a large chunk of the population.
3. Term Insurance products should be made zero rated or at lowest GST slab rate of 5 % in order to maximize protection and drive social benefit of Insurance.
4. Online insurance products bypass distribution bottlenecks and are a great impetus for furthering the Digital India vision of the honorable Prime Minister. We would want to see a reduction in GST rates here as well, which would help increase the adoption & penetration of online Insurance products in the country.
5. Insurance and Pension Policies should be classified as capital assets for the class of policies which are not exempt u/s 10(10D), so that customers can benefit from the lower tax rate under long term capital gains.