2025 Budget: SBI Advocates Healthcare, Insurance Tax Relief

As the Union Government prepares for its 2025 Budget, there is a latest report from State Bank of India that suggests this budget should particularly focus on revitalizing the insurance and healthcare industries of the country. The report emphasizes that in order to consider these measures several key measures that the government would need to ponder over.

Other recommendations include the exemption of GST and taxes on premiums for term and health insurance, which may help them become more affordable and accessible to the average consumer. The report would also increase the healthcare budget to 5% of the GDP rather than the current levels, and to change the GST rates to a uniform 5%-12% on medical devices, thus reducing the compliance burden of the manufacturers and distributors in the different states.

The report also commented that the insurance penetration has actually been falling. Penetration for India has now declined from 4% in FY23 to merely 3.7% in FY24. In life insurance penetration, the decline was more steep to 2.8%. For that, the report recommends tax exemptions for life and health insurance premium under both old and new tax regimes to an extent of Rs 25,000 to Rs 50,000 as this would more people to take an insurance policy.

This also envisages consolidation of the available government-sponsored pension schemes, like APY, PM-SYM, PM-KMY, and NPS-Traders, under one umbrella, thereby making their facilities more accessible and efficient. There is also a requirement for a specific insurance scheme for employees engaged in the MSME sector and a scheme to protect MSME promoters against business losses due to various causes.

On the healthcare front, it calls for major public spending to be stepped up, and has recommended raising healthcare allocation to 5% of GDP-from the 2.5% target set in National Health Policy 2017-that would meet India's growing and ageing population's needs. The report also suggested using proceeds from a potential 35% GST on tobacco and sugary products to fund public health programs.

These measures are aimed at making the insurance and health sectors of India more efficient and inclusive, thus supporting economic growth and ensuring that the social security of citizens throughout the country is bettered.