Satishwar B.,MD & CEO, Bandhan Life shares Budget 2026 Wishlist

One of the most welcome reforms in 2025 was the government’s decision to remove GST on life insurance. This has made life insurance about 18% more affordable, encouraging more people to secure their families’ futures. While insurers have faced increased operational costs due to the loss of Input Tax Credit (ITC), I am hopeful that increased demand driven by better affordability will help offset this impact.

For the upcoming Union Budget, we have three key expectations that will not only benefit the life insurance industry but also help improve financial security for millions of Indians:

1. Better Tax Benefits for Protection and Health Insurance
To accelerate insurance penetration and achieve the vision of ‘Insurance for All by 2047’, we are hopeful that the government will consider enhancing tax benefits on life and health insurance. Specifically, we recommend either increasing the current limit or introducing a separate, dedicated section for life insurance premiums.

It is also crucial that these tax benefits be extended to both the old and new tax regimes, making insurance more inclusive and accessible to all.

2. Tax Relief on Annuity Plans

India is facing a widening retirement savings gap, projected to reach $85 trillion by 2050 [1] .We need to do something to fill this gap. To tackle this, the budget this year can:

• Extend the ₹50,000 deduction to all pension and annuity products.
• Reduce tax on annuity payouts, making retirement income more tax-efficient and attractive for savers.
• Simplifying and enhancing tax benefits for these products will encourage more Indians to invest in long-term income security.

3. Increase Premium Cap for tax-free maturity for ULIPs to ₹5 lakh
Today, ULIPs have a ₹2.5 lakh annual premium cap for tax-free maturity. We hope the Budget will raise the ULIP cap to ₹5 lakh, same as traditional products. A uniform cap will make tax benefits easier to understand for everyone.

With continued policy support and forward-thinking reforms, the life insurance sector is ready to play a stronger role in safeguarding financial well-being and enabling long-term security for Indian families.

“The GST waiver has made life insurance more affordable and accessible. We’re hopeful that this year’s Budget will continue that momentum. Better tax benefits for protection and health plans—under both tax regimes—can help more families get covered. We also hope to see stronger support for pension products and an increase in the premium cap for ULIPs to Rs. 5 Lakh, similar to traditional plans. Simple, inclusive reforms can go a long way in securing India’s financial future and accelerate progress towards ‘Insurance for All by 2047.’”