Union Budget 2015 Proposes to Abolish Service Tax on Health Insurance Premiums

Health insurance is a vital part of human existence today. With new diseases lurking in the dark to pounce on you, a health insurance cover gives you the financial assurance in helping you fight the dreaded illnesses. For receiving better health care, people must dole out a heavy premium to enjoy its benefits, when the need arises. But, does pay a service tax on already heavy insurance premiums worth the talk?

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    The Insurance industry has paid considerable attention to the health care sector with the launch of new insurance products aimed to meet the growing demands of health care for all sections of society. The IRDA’s constant effort for a customer-friendly environment by writing laws to protect the interest of both the policyholders and the insurance companies across the product segments has further boosted the Insurance sector. The optimism has been taken further with the introduction of newer initiative of e-policy issuance.

    As per the recent WHO reports, the Indian Healthcare System is ranked at 112 out of 190. It is safe to say that India’s health care facilities have drastically improved in the last decade. The rural divide has made the picture a bit bleaker though. But over all significant advancement has been made. Globalization has played a pivotal role in maintaining and improving the health care sector of India. India competes with top quality health care facilities at an international level; however, the population is affected with lifestyle illnesses like diabetes and cardio vascular diseases. This has resulted in the increase of long term health care costs.

    However foreign insurance companies have noted that only about 5% of the Indians are covered by health insurance policies. It is not possible to make the situation better in a single day. It will take time and ample research for the health care facilities and policies to stay popular and in tune with the good of the citizens. However with the majority of the rural regions having no clue about health care policies, it significantly brings down the total development.

    The Health Insurance sector is looked upon as a secondary investment as compared to other insurance schemes. People fail to realize its importance until a medical emergency befalls them.

    Tax benefits on the healthcare policies will allow the healthcare sector to boom again. Under the current norms a maximum amount of Rs. 15,000 inclusive of any amount paid for the preventive health care checkups can be availed for a deduction under Income Tax u/s 80D Act. Also senior citizens get an additional claim of Rs. 5000 under this section. Policy holders can claim a maximum of Rs. 30,000 and 35,000 in case the parents are senior citizens.

    Considering the gravity of the situation in India the claim amount should be raised to a minimum of Rs. 100,000 for family, and additional Rs. 10,000 for senior citizens with immediately effect.

    Such moves will only improve the situation and facilitate in providing better health care facilities to the public. And this will boost the sales revenues of the health care sector. Not to mention tax rebates will push the health insurance sector to new heights.

    (Source: This article has been adapted from the article "UNION BUDGET 2015: REMOVE SERVICE TAX ON HEALTH INSURANCE PREMIUM: BIMBHET" that appeared on Feb 5, 2015  in newshub.org.)

    Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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