Budget 2024 – Union Budget 2024-25 Date, Highlights and Expectations

Updated on Feb 15, 2024

India’s finance minister Nirmala Sitharaman presented the budget for FY 2024-25 on February 1, 2024. The announcement brought some exciting news to the insurance sector, while it also dampened a few spirits.

Let’s look at the 2024-25 key budget highlights about the insurance sector here.

Snippets and Updates on the Insurance Sector in Budget 2024-25

As the Union Budget for 2024-25 was discussed in the parliament today, all eyes were glued towards Union Finance Minister Nirmala Sitharaman and her announcements.

Here are some highlights of the budget 2024-25 about the insurance and healthcare sector:

• No change has been suggested in direct or indirect tax rates including import duties as announced by the finance minister
• So, the same tax rates for Direct and Indirect taxes will retain
• Tax benefits for startups, Investments made by sovereign wealth and Pension funds will be extended to March 31, 2025
• The budget focuses on improving tax payer’s service. Tax reforms have broadened the tax base, while it has increased tax collection
• The budget announcements also offered relief on Old Direct Tax disputes of up to INR 25,000, a move that is expected to benefit 1 crore taxpayers
• On FDI, Finance Minister Nirmala Sitharaman said that FDI now means ‘First Develop India’ and added that bilateral trade treaties are on the cards to encourage and boost FDI
• The minister also announced that healthcare benefits under Ayushman Bharat Scheme will be extended to all ASHA and Anganwadi workers
• The government announced encouraging vaccination against cervical cancer of young girls in the age group of 9 to 14 years for the prevention of the disease
• The finance minister said that GST or Goods Service Tax has helped India become ‘one nation one market one tax’ and that “Tax reforms have led to deepening, widening of the tax base”

Also Read: Paybima Insurance Trend Report 2024

Looking back – Budget 2024 Highlights

• The rebate limit was increased to INR 7 lakh under the new tax regime
• Tax slabs under the new regime were brought down to five, while the tax exemption limit was raised to INR 3 lakh
• The benefit of the standard deduction to the salaried employees as well as pensioners was extended under the new tax regime
• The new tax regime was made the default regime. However, the government gave the option to taxpayers to choose the new regime or to continue to pay taxes according to the old regime
• A significant drop from 37% to 25% was announced on the highest surcharge imposed on personal income tax
• The non-governmental employees on salary were given the benefit of an increased leave encashment limit from INR 3 to INR 25 lakh on retirement
• Capital gain deductions /s 54 and 54F on investment in a residential house was capped at INR 10 crore
• FY 2023 saw an overall 10.3% upsurge in India’s insurance industry
• India recorded a consistent premium growth in the Life Insurance market 2022-23 with a premium income of INR 7.83 lakh crore, registering a 12.98 % growth
• General and Health insurance companies collected INR 89,492 crore as health (excluding Personal Accident and Travel) insurance premiums, registering a growth of 23 % over the previous year
• The announcement of a 100% Foreign Direct Investment (FDI) for the insurance sector was another good news

Announcements that Dampened Spirits in 2023

• Withdrawal of tax-free status to maturity proceeds of insurance policies was a blow to the insurance sector. The withdrawal of tax benefits on the maturity of traditional endowment policies (except ULIPs) was done for proceeds with an aggregate annual premium of over INR 5 lakh. Hence, income received from insurance plans (excluding ULIPs) with premiums above INR 5,00,000 in a year was taxed for policies that were issued on or after April 1, 2023. However, if the income is obtained in case of the death of the insured, it is proposed to be exempt.
• The budget 2023 also stated that the conversion of gold into electronic gold receipts would not be considered capital gains and vice versa.
• The TDS rate was announced to be lowered from 30% to 20% on the taxable amount of EPF withdrawal in cases where the EPF account is not seeded with the PAN card of the account holder from April 1, 2023.

Demands and Expectations for Budget 2024-25

1. Insurance Sector Seeks Much-Needed Parity with NPS:

One expectation of the insurance sector for budget 2024-25 is parity regarding NPS so that the industry should be at par in terms of the National Pension Scheme.

2. Demand for Tax-Free Status to Annuity Income:

Investing in pension and annuity products is essential to save for retirement. If the government makes taxes easy or removes taxes for annuity products, it will encourage people to invest more in such plans. This is another thing that most insurance honchos are seeking from the 2024-25 budget.

3. Standard Deductions under both Income Tax Regimes expected to rise:

Will the budget revise income tax slab rates for FY 2025 for both old and new income tax regimes? This is a concern that many leading insurance companies are waiting to know from the budget 2024 announcements.

4. Things that Taxpayers May Expect:

The last budget saw the implementation of various modifications to the concessional tax regime to favor both the middle and high class with lower tax rates and a limit on the highest surcharge rate respectively. Many insurance leaders are expecting a few changes to the CTR to encourage wider adoption of the new tax regime.

5. Interest Deduction on Loans Availed for Electric Vehicles (EV):

EV players are expecting an extension of some incentives under Budget 2024 for the rapid adoption of EVs in India and to make it more affordable for the people.

Takeaway

Many expectations and buzz were streamlined with the budget announcements this morning, which as per experts is a prudent and confident budget in terms of sustaining the growth of the economy.

Manoj Purohit of BDO India stated the below on Insurance:

“The government has continued its support to farmers under the crop insurance facility and intends to further strengthen the same. This will ensure penetration and awareness around insurance in rural India thereby providing a boost to the insurance industry.”

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