Budget must give tax relief in household medical costs: Insurance industry

The insurance industry sees the Budget as something really important for peoples security. Here is what the insurance industry wants to change and why they want to do it.

1. The Problem of Medical Costs Going Up Fast

One big reason the insurance industry wants tax relief is that medical costs in India are going up very fast between 12% and 14% right now. This is much higher than the cost of living and how much money people are making from their jobs. The insurance industry is worried about inflation and its impact, on the insurance industry. The insurance industry thinks that something needs to be done about inflation.The problem with Section 80D of the Income Tax Act is that it does not do enough.

Section 80D of the Income Tax Act says people can get the following money back when they pay tax:

* Individuals or Families can get ₹25,000 back

* Senior Citizens can get ₹50,000 back

* People can also get ₹5,000 back for going to the doctor to check if they are healthy. This ₹5,000 is already included in the amounts I mentioned above.

The people who know a lot about this say that these amounts are very old.

For a family of four people it now costs a lot of money to get good health insurance that covers ₹10 lakh to ₹15 lakh.

The cost of this insurance is often, than ₹25,000.

This means the family has to pay tax on the amount they pay for the insurance.

2. The insurance people have some requests, for the money that will be spent in 2026. They want the Finance Ministry to think about these things. The insurance industry has a plan that they want the Finance Ministry to look at. The main goal is to move from having insurance for some people to having insurance for all people by 2047.

To do this people want to make some changes.

One of these changes is to double the deduction limits.

Insurance companies really want the government to increase the Section 80D limits.

They have a proposal that says the individual limit should be increased to ₹50,000 and the senior citizen limit should be increased to ₹1,00,000.

The reason for this is that higher deductions will encourage families to buy insurance that actually covers them for a lot of money like ₹20 lakh or more of just buying insurance that covers them for a small amount of money like ₹2-3 lakh, which is not very useful when they need to have a big surgery or are really sick.

Insurance, for All is what we want by 2047.B. Inclusion in the New Tax Regime

Currently benefits from taxes that are related to insurance are only for the Old Tax Regime. The government is trying to get taxpayers to switch to the New Regime and this is making the insurance industry worried about people not having protection.

The Demand is that the government should introduce a deduction or a rebate on health insurance in the New Tax Regime. This way people can choose a tax structure without giving up on their healthcare security.

C. Rationalizing GST on Premiums

Now people have to pay an 18 percent GST rate, on health insurance premiums. Lots of people who’re in charge of big companies think that health insurance is something we all need, not something extra we can buy if we want to.

They have a plan: make the tax on health insurance premiums really low, like 5 percent or do not charge tax all for older people and for insurance that covers small things.

If we do this it will help people because they will not have to pay much money out of their own pockets so health insurance will be cheaper, for people who are not rich but also not poor what we call the “missing middle” population.

3. The industry wants this for more than making money. There are reasons why this is important.

The main reasons are:

* Reduced Burden on Public Healthcare: When people have insurance they go to private hospitals. This means that government hospitals do not get too crowded.

* Stability: Sometimes people in India have to spend all their money on medical emergencies. This can make them very poor. If people have insurance they will be protected from this kind of problem. The government can also help by giving tax benefits to people who buy insurance. This way insurance can help people deal with medical expenses.

The industry wants people to have insurance because it helps people and the country in many ways. Medical insurance helps people, in India by giving them protection. It also helps the government by reducing the number of people who go to hospitals.The government should really think about helping people with Preventive Care. They can do this by letting people claim money back on taxes for health check-ups. Now people can claim up to ₹5,000 but the government should increase this to ₹15,000. This will help people get checked out early which is a lot better than waiting until they’re really sick. Preventive Care is important because it is much cheaper to fix health problems when they are found early than when they become big problems, like chronic diseases. By doing this the government can encourage people to take care of their health with Preventive Care.Here is a summary of the changes that people in the industry are talking about.

The current rules have some problems that need to be fixed.

For example the limit for tax benefits on health insurance for individuals is ₹25,000. It should be increased to ₹50,000.

This is because the cost of health insurance is going up and up.

The same thing applies to citizens, where the limit should be increased from ₹50,000 to ₹1,00,000.

This will really help people who need health insurance.

People are also talking about the tax on health insurance premiums, which’s currently 18%.

They think it should be reduced to 5% or 0%.

Another issue is that currently you can only get tax benefits under the tax system.

People think you should also be able to get these benefits under the new tax system.

There is also something called the “Annuity” Problem.

Insurance companies are saying that the money people get from annuities, which’s like a pension is taxed.

They think this is unfair for senior citizens who use this money to pay for medical bills.

So they are asking for annuity income to be tax-free or for the tax threshold to be increased.

This would be a help to older people and that is what the insurance companies are saying.

The main goal is to make things better for people who need health insurance senior citizens.

The proposed changes include increasing the 80D Limit for individuals and senior citizens reducing the tax on premiums and making the tax benefits available under the tax regime.

The insurance companies are really pushing for these changes to happen the change to the tax, on annuity income.The insurance industry’s message to the Finance Ministry is simple: Taxing health is a tax on resilience. By providing relief in the 2026 Budget, the government can turn health insurance from a “tax-saving tool” into a fundamental pillar of Indian household security.