Budget's 3-pronged approach aims at providing social security through pension, insurance penetration

By Vibha Padalkar

The Union Budget 2020-21 is woven around three prominent themes Aspirational India, Economic Development and Caring Society.

Laying emphasis on India being the fifth largest economy in the world, the Government has promised to leapfrog to the next level of health, prosperity and well-being, thereby bringing "Ease of Living" for every citizen. With this, one of the initiatives is aimed at providing social security through Pension and Insurance penetration.

While the Budget proposals provide for a new regime of taxation for Individuals and HUFs to opt for lower tax brackets without claiming any exemptions/deductions, it would certainly be imperative for the working age group to continue to focus on savings for their future needs, namely children's future and maintaining standards of living post-retirement, among others. Also, they will need to ensure they protect their families against any health or life eventualities, especially as our household borrowings increase and the shield of joint family system is no longer available.

Such savings can be achieved along with tax benefits which are available under various sections of the Income-tax Act law under the existing tax regime. This amongst others include deduction of Rs. 1.5 lakh under section 80C for life insurance premium and under section 80CCC for contribution to pension plans, deduction of up to Rs. 75,000 under section 80D for health insurance premiums paid for self, spouse, dependent children and senior citizen parents.

Even the deduction of Rs. 50,000 for contribution to NPS under section 80CCD(1B) by employees and the deduction for contribution by an employer to NPS continue to be available to an individual.

These tax benefits certainly provide an incentive and help get mindshare of Indians to remain focused on their saving, pension and protection needs, ensuring fulfillment of the Government's key themes for this Budget.

- The author is the MD & CEO of HDFC Life.

Source: https://economictimes.indiatimes.com/magazines/panache/budgets-3-pronged-approach-aims-at-providing-social-security-through-pension-insurance-penetration/articleshow/73901745.cms