Charting a New Course: Our Budget Wishlist 2024

The upcoming Indian Union Budget for 2024 presents a significant opportunity to address some of the crucial challenges faced by the life insurance sector. As a leader in digital life insurance, we're all about making life insurance accessible for everyone, in tune with the government’s vision of 'Insurance for All by 2047'.

This vision requires a collaborative effort from both industry stakeholders and policymakers. Our CEO Mr Satishwar B, recently wrote about this vision in an article. It included a wishlist for this year’s budget as well – a set of suggestions that can play a crucial role in paving the way for a financially secure India:

Making Retirement Less Taxing

Over 100 million Indians are heading for a retirement disaster. And with a predicted $85 trillion gap in retirement funds by 2050 in India, we need to act fast. Offering tax reliefs for pension products like the National Pension System (NPS) can motivate more individuals to invest in these essential financial safeguards.  The current ₹50,000 tax exemption for NPS under Section 80CCD(1B) should also apply to pension and annuity plans to encourage more people to use them.

Tax Breaks for Bigger Insurance Coverage

India's struggle with inadequate insurance coverage is a pressing concern. When tragedy strikes and the primary breadwinner is gone, families are often left in the lurch. To get more people under the life insurance umbrella, we propose:

Splitting Up Savings for Life and Health: Tweaking tax sections 80C and 80D to give separate tax deductions for life-threatening risks in life and health insurance, plus for fixed-term insurance plans. This can make a huge difference in covering people when they need it most.

Full Deduction for Life Insurance Premiums: Allowing individuals to fully deduct life insurance premiums from their taxable income, as stated in Section 56, without any reduction due to claims under other sections such as 80C. This will significantly boost the appeal of insurance products. This step will incentivize more people to invest in life insurance, enhancing their financial security.

GST Tweaks for Wider Insurance Smiles

The current Goods and Services Tax (GST) structure can hinder the widespread adoption of life insurance. To address this, we recommend:

Cutting GST on Term Life Insurance: Slashing GST rates on term life policies will make them more wallet-friendly and accessible to more people.

Zero-Rating the Essentials: Implementing a zero-rating for crucial policies like the Pradhanmantri Jeevan Jyoti Bima Yojana, smaller insurance coverages up to ₹2 lakh, and annuity products for NPS subscribers. This means no tax, but businesses still get their tax perks. It's a win-win! This step will significantly expand the reach of financial security to more citizens.

Bandhan Life along with other life insurance players, is committed to building a financially secure India. The support from regulatory bodies and budgetary incentives will go a long way in fulfilling this dream.