Budget wish list: Push for pension plans, zero GST on term policies

In India, life insurance as a percentage of GDP stood at 3.3 per cent against the global average of 6.4 per cent in 2016. From Budget 2018, we expect some of the following measures that may result in deepening financial inclusion in our country:

  • In India, annuity products are taxable and hence, unattractive compared to other investment options. If annuity from maturity of pension funds is made tax free under Section 10(10A) of the Act or a standard deduction/ threshold/slab limit on the same is assigned based on income and ages – the middle class would be initiated towards making a long-term investment under pension schemes.
  • Health and protection needs of the lower middle class and weaker sections of society have been largely unaddressed. If a separate tax deduction for life and health insurance u/s 80 other than Section 80C & 80D is given, it would help a large chunk of the population.
  • Term Insurance products should be made zero rated or at lowest GST slab rate of 5 % in order to maximize protection and drive social benefit of Insurance.
  • Online insurance products bypass distribution bottlenecks and are a great impetus for furthering the Digital India vision of the honorable Prime Minister. We would want to see a reduction in GST rates here as well, which would help increase the adoption & penetration of online Insurance products in the country.
  • Insurance and Pension Policies should be classified as capital assets for the class of policies which are not exempt u/s 10(10D), so that customers can benefit from the lower tax rate under long term capital gains.


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