Budget 2025: SBI Advocates for Increased Healthcare Spending and Tax Reforms
As the Union Government gears up for the Union Budget 2025, the State Bank of India has called for a renewed focus on the insurance and healthcare sectors. In its latest report, SBI suggests that the government allocate 5% of GDP to healthcare and rationalize the Goods and Services Tax (GST) on medical devices to a uniform rate of 5%-12%.
The SBI report underlines the requirement of tax exemption on term life and health insurance premiums, akin to the National Pension Scheme (NPS). It also recommends a separate deduction for life and health insurance premiums, in the range of Rs 25,000 to Rs 50,000, both under the old and new tax regimes. The report also suggests that the government-sponsored pension schemes must be brought under a single umbrella, and these schemes include the Atal Pension Yojana and Pradhan Mantri Shram Yogi Maandhan.
As India's insurance penetration has been going down to 3.7% in FY24 from 4% in FY23, the vision of 'Insurance for All by 2047' by IRDAI will need urgent reforms. The report goes on to indicate that the penetration of life insurance has seen a sharper fall and is at 2.8%, while that of non-life has stagnated at 1%.
To spur growth in these industries, SBI recommends insurance premium tax relief that would encourage even more people to take health and life insurance covers. According to the bank, such a move would enhance financial security and access to healthcare for India's population.
