Keypoints:
- The existing tax laws allow individual taxpayers to claim a tax break on medical insurance premium paid for themselves and for family.
- Equity markets are at an all-time high and have rebounded since the fall at the start of the COVID-19 outbreak.
- There is also a debate that the government may re-introduce tax deductible infrastructure bonds.
“Given the global focus on health, we anticipate that this year’s union budget will have larger thrust on health reforms,” says Mayank Bathwal, CEO, Aditya Birla Health Insurance.
The paperless union budget is set to be released by the Finance Minister on February 1,2021 and the minister’s task cut out given that the fiscal year 2020-21 has been quite challenging and unprecedented for the government as well as the common man.
During the 2020 lockdown, travel was at complete halt and and some historical tax breaks existed for actual travel (typically called Leave Travel Concession or LTC), the government had introduced a scheme to provide tax relief if an individual instead of travelling, bought goods or availed services during the period October 12, 2020, to March 31, 2021. These goods and services should be subject to GST of 12% or more and the payment should be made through digital modes.
Boosting the consumer demand in the economy, it is expected that the financial minister may extend the LTC cash voucher scheme from March 2021 to fiscal year 2021-22.The existing tax laws allow individual taxpayers to claim a tax break on medical insurance premium paid for themselves and for family.
It is also said that the government may be re-introducing tax deductible infrastructure bonds, where taxpayers who subscribe to bonds will be eligible to claim deduction of such investment (subject to certain limits) from their gross income. This will serve the twin objective of providing a tax benefit to taxpayers as well as much needed inflow for the government to boost the infrastructure sector.
“Given the global focus on health, we anticipate that this year’s union budget will have larger thrust on health reforms,” says Mayank Bathwal, CEO, Aditya Birla Health Insurance.
Bathwal expects the Government to increase deduction under Section 80D against medical expenses, to increase the penetration. He adds that, “Hence it becomes important to increase the limits defined for mediclaim premium tax deduction under section 80D of the Income Tax Act to ₹1,00,000 ( ₹50,000 for self and spouse + ₹50,000 for parents). Further allowed dependent relationship should be re-looked”.
