The government should consider reducing GST rate on insurance policies: Taranpreet Singh,...

The government should consider reducing GST rate on insurance policies: Taranpreet Singh, TASS Advisors

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India Budget 2018

Taranpreet Singh
Mr Taranpreet Singh

Post demonetization, a lot of surplus cash of common public is lying with banks yielding negligible/ low returns. The government should support the investment drive by increasing the limit of deduction under section 80C from the current limit of Rs. 150,000/- p.a to a higher range of around Rs. 250,000/-. Such increased investment can support specific investments in infrastructure and clean energy projects which is a key focus of the Government.

The dividend distribution tax (DDT) discourages companies from paying dividends, which dampens investor confidence. The DDT should be removed to improve investor sentiment.

The government should consider reducing GST rate on insurance policies from existing 18% to lower bracket. As India lacks in social security initiatives, possible reducing in GST impact on personal and medical insurance premiums shall boost the investment by the common man in the insurance sector.

Considering the steep increase in medical inflation, there is a great need to relook at the tax-free medical allowance exemption which has been stagnant since last several years at Rs. 15,000/- per annum. Given the overall household medical expense is far more than this limit, there is an urgent need to revise this limit to the higher bracket to at least Rs. 50,000/- per annum.

Taranpreet Singh is the Partner Tax regulatory services at TASS Advisory