Union Budget 2024-25: Likely Scope for the Insurance Sector

Union Budget 2024-2025 Highlights

All eyes were glued on Union Finance Minister Nirmala Sitharaman today as she presented the Union Budget 2024-25 in the parliament.

Here are some highlights of the budget 2024 related to the insurance and healthcare sector:

• FM revised the tax structure under the new tax regime and incorporated changes in it
• Taxpayers opting for the new tax slab will now get standard deductions at INR 75,000 from INR 50,000 that was fixed earlier
• Salaried employees will now be able to save INR 17,500 in income tax

       Here is the revised tax structure:

     - 0 -3 Lakh = Zero/Nil deductions
     - 3 – 7 Lakh = 5% deductions
     - 7 – 10 Lakh = 10% deductions
     - 10 – 12 Lakh = 15% deductions
     - 12 – 15 Lakh = 20% deductions, and
     - 15 lakh and above = 30% deductions

• NPS Vaatsalya policy for minor children was announced under which parents can invest in the policy on behalf of their children. Upon attaining adulthood, the fund/policy can be converted to a regular NPS plan
• Deduction on employers’ contribution to the NPS schemes of private sector employees has been hiked to 14%, up from 10% fixed earlier under the new income-tax regime
• Announcements were made on the changes in the capital gains tax regime by hiking the long-term capital gains to 12.5%, up from 10%
• Long-term capital gains income up to INR 1.25 lakh exempt from tax
• Capital gains tax’s holding period was streamlined. The Listed financial assets held for more than a year are now long-term, while the unlisted financial and non-financial assets held for more than 2 years are now categorized as long-term assets
• The government announced an allocation of INR 89,287 crore in the health sector
• The Union Budget approved a 20% TDS on repurchase by mutual fund (MF) or UTI withdrawn
• Short-term gains tax on MF or UTI will be 20%, while LTCG on some financial assets will be 12.5%
   

Snippets of Union Budget 2023 - 2024

• No changes were made to the old tax regime·
• The new tax regime became the default regime.
• Though taxpayers had the option to opt for the old tax regime
• No tax was levied on income up to Rs 7.5 lakh per annum under the new tax regime
• The government reduced the surcharge rate to 25% from 37% under the new tax regime
• The government removed tax-free status on certain insurance policies with premiums above INR 5 lakh
   

Snippets of Union Budget 2022-23

• The government announced the rollout of an open platform for the National Digital Health Ecosystem to enable the digitization of data on health and healthcare providers to give exclusive access to health facilities on a virtual platform.
• The exclusive health identity system helped the insurance companies assess risks and review premiums and claims better
• The government showed commitment to building a strong health system through health insurance budget policies