The tax deduction available to health insurance policies under Section 80C of the Income Tax Act has been raised from Rs 10,000 to Rs 15,000 and for senior citizens it has been raised from Rs 15,000 to Rs20,000. The deduction was instituted to encourage access to health insurance but insurers do not seem content, since they feel this budget has missed an opportunity. Says M Ramadoss, chairman and managing director, Oriental Insurance: “The increase of Rs 5,000 is marginal. Given rising medical expenditures, an exemption of Rs 25,000 was called for. Moreover we had also asked for a premium tax of a standard 10 per cent in lieu of service tax, which again, didn’t come through”. Adds Shikha Sharma, managing director, ICICI Prudential: “For the young Rs 15,000 may be enough, but for senior citizens deductions of Rs 25,000-30,000 would have been better”.The budget has not offered much to life insurance, which had sought either a separate section for tax deduction on premium contributions or an amount higher than the Rs 1 lakh limit currently available under Section 80C. Neither proposal came through. “The budget largely focused on infrastructure, health and agriculture which are important for a nation’s economy, but missed out insurance, which funds these long-term activities. It is a missed opportunity. While higher deductions on health insurance are welcome, the fact that pensions did not receive any attention was unfortunate. Given the increasing tax revenues there was certainly scope for bringing pension policies under tax reforms,” said Trevor Bull, managing director, Tata AIG Life Insurance.
