Lok Sabha Question No. 2218 (UNSTARRED), answered on 2024-08-05
Subject: Issues in Public Insurance Sector
Ministry: FINANCE
Asked by: Shri Rajmohan Unnithan, Shri Asaduddin Owaisi

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA

## UNSTARRED QUESTION NO. 2218

TO BE ANSWERED ON MONDAY, AUGUST 5, 2024 SHRAVANA 14, 1946 (SAKA)

## ISSUES IN PUBLIC INSURANCE SECTOR

## 2218 SHRI RAJMOHAN UNNITHAN: SHRI ASADUDDIN OWAISI:

Will the Minister of FINANCE be pleased to state:

- (a) whether any steps are being taken by the Government to withdraw GST on medical and life insurance premium, if so, the details thereof and if not, the reasons thereof;
- (b)  whether the new tax regime removed life insurance from savings for the purposes of income tax relief under Section 80C and if so, the reasons thereof and the steps taken/being taken by the Government to reintroduce a separate and substantial exemption limit for life insurance premiums in the new tax regime introduced in 2023-24;
- (c)  whether  the  deduction  for  health  insurance  premium  payment  under  Section  80D  has  been discontinued and if so, the reasons therefor and its impact on the healthcare insurance sector; and
- (d)  whether  the  Government  has  considered  merging  and  consolidating  the  public  sector  insurance companies like National Insurance, New India Assurance, Oriental Insurance and United India Insurance in order to achieve economies of scale and reduce inefficiencies and if not, the reasons therefor?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising of representatives from both the Centre and the States/UTs. There is no such recommendation from the Council in this regard.
- (b) to (c):  The new tax regime was introduced for individual and HUF taxpayers by the Finance Act, 2020. Under section 115BAC of the Income-tax Act, 1961 (the Act), with effect from assessment year 2021-22,  individual  and  HUF  had  an  option  to  pay  income-tax  at  the  lower  slab  rates  subject  to certain  conditions including  that  they  do  not  avail  specified  tax  exemptions  or  deductions,  such  as deduction under section 80C or deduction for health insurance premium payment under section 80D. The deduction under section 80C and section 80D of the Act are available for taxpayers in the old tax regime.
- 2 This  is  in  line  with  the  stated  policy  of  the  Government  to  simplify  the  Act  by  removing exemptions and incentives while at the same time reducing the rates of taxes.
- 3 Finance Act, 2023 further reduced rates under the new tax regime, extended it to certain other categories of persons and made it the default regime for such persons. Finance (No. 2) Bill, 2024 has now proposed  restructuring  of  slabs  of  the  new  taxation  regime  with  effect  from  assessment  year 2025-26.
- 4 There is no further proposal to amend the provisions of the new tax regime as of now.
- (d) Capital of Rs.17,450 Crore was infused during 2019-20 to 2021-22 in three Public Sector General Insurance Companies namely, Oriental Insurance, National Insurance and United India Insurance to focus on their growth, post-capital infusion.  There is no proposal under consideration of Government at present for merger of Public Sector General Insurance Companies.