West indian people

EU budget 2022: granting tax exemption to people who opt for home insurance

Insurers believe that it has become even more crucial to provide the necessary impetus to the insurance industry to continue to protect both the economy and society against unforeseen risks.

The dynamic healthcare environment has been a catalyst in the pace of the need for health insurance in India. Nowadays, insurance has become a daily need in order to be sufficiently protected against uncertainties.

Insurers therefore believe that it has become even more crucial to provide the much-needed boost to the insurance industry in the form of the measures below to continue to protect both the economy and society against unforeseen risks:

1) On the direct personal taxation front, the government should grant a tax exemption to people opting for home insurance. Thus, “providing them with much-needed motivation, especially in light of the increase in natural calamities that leave people stranded. This can be done by providing a distinct limit beyond the already skewed 80°C limit,” says Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance.

2) On the indirect tax front, the government should directly reduce GST rates on insurance premiums given the low penetration of insurance in India and the fact that insurance is meant to provide financial support against any sudden human or economic loss.

3) Parametric insurance (index scheme) should be introduced, which compensates the insured for losses resulting from catastrophic events. The premium can be collected with the property tax, and when a loss occurs, the amount of the loss is transferred directly to the Jan Dhan account of the insured linked to his home insurance policy.

4) The government should introduce a universal health insurance scheme, as has been done in Jammu and Kashmir, to be implemented in all states/TUs in India, which covers all citizens of the region instead of some individuals.

5) After the introduction of the GST, the industry receives various correspondence from different state authorities requesting information relating to specific issues. “This causes administrative difficulties for large units involving responses to several authorities on the same questions. This can be eliminated if a ‘common assessment authority’ is established for companies with pan-India presence with turnover above the specified threshold,” says Singhel.

6) Covid has highlighted the importance of protection and savings, so the budget can provide additional tax benefits for protection and retirement products.

7) With the private consumption recovery still lagging behind pre-pandemic levels, some fiscal support can be provided to private consumption, especially for the automotive and durable segments.

“In general, given the impact of Covid, budget deficits have increased, and the government will need to focus on a roadmap to bring deficits back to pre-covid levels. I think these few solutions will go a long way to improve the life expectancy of Indians and enhance the financial and economic stability of our country,” Singhel said.

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