Budget 2020 income tax: The cost of hospitalisation is rising and medical treatments are becoming more expensive. It is estimated that medical inflation is more than the general rate of inflation. This is putting pressure on one’s out-of-pocket medical expenses. With the Budget 2020 coming up, the general insurance industry expects some relief for the health insurance industry that could help individuals to get more insurance coverage.
"The industry is hoping the tax deduction cap for medical insurance under Sec. 80D to be increased further from Rs. 25,000 to Rs. 50,000 for self, and from Rs 50,000 to Rs 75,000 for dependent parents. This will be a huge relief for those who are struggling to meet rising healthcare costs," says Pushan Mahapatra, MD & CEO of SBI General Insurance. The Budget 2020-21 may bring some relief to the health insurance buyers in the country.
Currently, for those who are below age 60, the limit stands at Rs 25,000. This includes self, spouse and children and the health cover could be a Mediclaim, Family Floater, Critical Illness etc. the premium paid towards any of these schemes gets deducted from the gross income under section 80D. For those who are above age 60, the limit is Rs 50,000.
"Having paved the way for growth so far, we hope the government will utilize the forthcoming Union Budget to incentivize the end-users for enhanced insurance awareness and penetration. These steps are critical as it falls within the purview of legislature and administration," adds Mahapatra.
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Also, the impact of tax on the premium is a concern of the industry. Currently, on most insurance products, the GST is 18 per cent which pushes the cost higher for the end-user. "The second incentive will be the abolition or at least a substantial reduction in the GST on all Personal Lines of Products – from the existing 18 per cent to 5 per cent.
Alternatively, the government may consider making all personal lines-Health, Accident and Home – GST exempted to make the insurance affordable and available to a larger populace. While the GST remains outside the purview of the Budget, the government may find some innovative steps to improve the penetration of the personal lines," says Mahapatra.
It remains to be seen what steps does the Union Budget 2020 takes to make health insurance more affordable to the population.