With the Finance Minister’s impending Union Budget speech coming up, we in the start-up world, specifically in the insurance and fintech space have the following wish list from Budget 2016:
1) Incentivize domestic capital: The budget should consider ways to incentivize domestic capital, which is typically risk-averse, in the insurance sector and specifically fintech spaces. The Budget should also consider relaxation in structures, which make private secondary transactions more liquid from a tax perspective.
2) Encourage Small and Medium Businesses (SMBs) to cover employees under group health and accident insurance schemes: If service tax is removed on these plans, and tax deductions given on this class of employee expenditure, it would play a significant role in securing the most vulnerable. Case in point, in the recent Chennai floods, more than 57,000 houses were damaged – most of them reported to be in pincodes that housed working class people. Data says only 10% of them were covered.
3) Incentives for people below a threshold economic level: Consideration of tax breaks or tax incentives on office property insurance and home insurance for the people below a threshold economic level, who work at these places.
4) Make insurance premiums more affordable for masses by waiving off the Service Tax: In the last few years, the government has taken several good measures to help penetration of insurance in our economy and that has been well received. However, there is still a great need to make insurance affordable for all segments of society. To this effect, the Budget should make Health Insurance, Accidental Disability Insurance premiums more affordable for the masses by waiving off the Service Tax of 14.5%.
5) Focus on promoting accident disability insurance: The Prime Minister has stressed on the importance of an accidental disability cover as part of Social Security through various schemes like Pradhan Mantri Suraksha Bima Yojana and Jan Dhan Yojana. To promote Accident Disability Insurance the expenditure incurred to cover this insurance should be included in the 80D or 80C deduction as well.
6) Finance healthcare expenditure of the lower economic and working class: To ensure Healthcare is accessible, affordable, the Government should, apart from introducing healthcare regulations, ensure that healthcare expenditure of the lower economic and working class is financed through Government funded/facilitated health insurance programs.
In an ideal world we would see fulfillment of all six wishes. However, it will be a big boost, if the government comes through on even three or four of the above.
Source:- Economic Times (Mumbai)
Date:- 22nd February,2016