Budget 2024: From GST reduction to expansion of Section 80 C, here's what the insurance sector is expecting
₹1.5 lakh to taxpayers for investing in various specific instruments and expenses like PPF, life insurance, ELSS, National Savings Certificate, etc. Experts believe there is an urgent need for a different tax exemption category for term insurance. “We have been asking the government to introduce a separate tax deduction limit for life insurance for the last 5 to 6 years but nothing has happened.
The reason is that the current Section 80 C is too cluttered where a person can claim deductions up to ₹1.5 lakh for PPF, Sukanya Samriddhi Scheme, ELSS, tax saving fixed deposits, school fees, principal sum of a home loan, including life insurance," said Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance. “The maximum deduction limit of ₹1,50,000 under Section 80 C gets exhausted owing to other allowable expenses like PPF, loans, etc. It’s time we declared a dedicated exemption category just for term insurance to fill this gap.
This will also incentivise taxpayers to opt for a term plan with higher coverage," noted Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com. Retirement planning is an essential part of securing one’s future and requires early investment. Reduction of tax on pension and annuity products would encourage more people to start investing for their retirement.
Policybazaar.com’s Santosh Agarwal believes that the tax imposed on pension and annuity products should be similar to that imposed on the National Pension Scheme (NPS). The measure would make long-term financial planning more lucrative for people. According to Agarwal, “The existing system imposes a tax on full annuity income including both principal and interest.
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