Like several other industries, the insurance sector has high expectations from the upcoming Union Budget 2025–26. Insurance sector stakeholders, including middle-class taxpayers, are hopeful that FM Nirmala Sitharaman will announce some tax relief measures, like higher 80D deductions and a GST cut on health insurance, on February 1, when she presents the Modi 3.0 government’s second full-fledged budget.
Ahead of the mega economic event, stakeholders from the insurance industry have outlined their expectations. They have also sought several other reforms that could boost affordability and innovation in the sector.
Experts believe these measures will play a pivotal role in achieving the government’s ambitious “Insurance for All by 2047” vision, as also outlined by the Insurance Regulatory and Development Authority of India (IRDAI). Here are some of the key demands the insurance sector and middle-class taxpayers have made to the government.
Reducing GST on health insurance
Dhirendra Mahyavanshi, Co-Founder and CEO of Turtlemint, praised the government and IRDAI for their initiatives but highlighted the pressing need to reconsider the 18% GST on health insurance policies. “Introducing tax relief measures for annuity and pension products and prioritising rural insurance accessibility will enhance affordability for the middle class and encourage broader adoption of insurance,” he stated. These measures, he emphasised, would also contribute to advancing financial inclusion and retirement savings.
Also read: Budget 2025: Home loan tax benefits to be included in New Tax Regime? Here’s what tax experts say
Calls for higher Section 80D Deduction limits
Anup Rau, MD & CEO of Future Generali India Insurance Company, said there is a need to hike the deduction limit under Section 80D, which has remained unchanged since 2015-16. India’s medical inflation rate stands at 14%, yet deduction limits have not been revised, he added.
“Linking these limits to inflation and extending benefits to the New Tax Regime could significantly boost health insurance penetration,” Rau suggested. He also advocated removing GST on health insurance to make coverage more affordable and reduce the government’s burden by enabling private sector-led solutions.
Increased healthcare spending: The need of the hour
Srikanth Kandikonda, CFO of ManipalCigna Health Insurance, underlined the necessity for higher public healthcare expenditure. “The National Health Policy proposes increasing healthcare spending to 2.5% of GDP by 2025,
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