Budget 2022-23: What It Holds For The Insurance Sector?

As India’s Finance Minister Nirmala Sitharaman presented the Union Budget for 2022-23, the entire nation was glued to the announcements today.

The government’s declaration of Rs 64,180 crore to be spent to improve healthcare services over the next six years that was made in today’s Budget is likely to bring hope to many sectors, including the Insurance sector.

The Insurance sector had its share of expectations pertaining to some very crucial and important matters, which are likely to help bring more and more people under the cover of Insurance.

Key Highlights of Budget 2022-23 for Healthcare and Insurance Sector:

Here are some of the key highlights of budget 2022-23 announcements pertaining to Healthcare and Insurance sector:

• One of the top announcements of Budget 2022-23 is the roll out of an open platform for the National Digital Health Ecosystem. The roll out will enable digitization of data on health and health care providers, and will allow exclusive access to health facilities on a virtual platform.
• This exclusive health identity system is likely to help the Insurance companies in assessing risks better, as well as in reviewing premiums and claims in a better way.
• It is evident from this budget highlights that the government is committed towards building a strong health system in the coming years.

The Insurance sector has had high expectations from the Central Budget for the year 2022-23 in many aspects including broadening the Insurance dissemination in the country to cover more people.

With higher incidence of tax, together with a high medical inflation of 7 to 7.5%, Health Insurance products have become highly priced for common people. Moreover, the unprecedented claims pay-out and the changes in risk perception in the recent times has aggravated the situation. Thus, to boost Insurance penetration and to make it easily affordable to one and all, the Insurance sector was looking forward for some important updates from Budget 2022-23.

Below were the Highlights (expectations) of the Insurance Sector from Budget 2022-23:

• Insurers were looking at reducing the 18% GST applicable on Health Insurance premiums to a minimum of 5%.
• Insurers expected Life Insurance to be capped separately and not with other financial investments clubbed under the IT deduction section (80C) at Rs 1,50,000.
• Life insurance being a long-term solution shouldn’t be capped under the 80C provision along with the shorter investments.
• Insurers further expected stamp duty be exempted from Term Life Insurance policies as they are risk products. As such, stamp duty is levied on total sum insured and not on the premium amount.
• The insurance sector also expected the government to address the double taxation policy in case of annuity payments.
• In double taxation policy, the GST has to be paid for reinsurance premium, and the Insurance broker is again expected to pay the same on the reinsurance brokerage. The Insurance sector wanted this double taxation to be removed to make the tax treatment fair to all.
• Further, the sector also expected the government to provide a roadmap on the capital infusion into the category where required.

Though it is yet to see whether, and to what extent, the above expectations will be fulfilled by the government. However, the announcement of Rs 64,180 crore on Health Care services sector is sure to positively impact the Insurance sector and bring cheer to the category.

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