Union Budget 2025 | Govt should address lack of input tax credit on vehicle insurance premiums for MSMEs, says Ideal Insurance co-founder Rahul Mohata

The MSME sector have pinned high hopes on the Union Budget FY 2025-26 documents and are keeping their fingers crossed regarding their expectations from the government's most important financial document of the year.

MSMEs contribute a whopping 30 per cent to India’s GDP and account for over 60 per cent of the workforce in the business sector. 

Credit: Special Arrangement

Finance Minister Nirmala Sitharaman will present the 8th consecutive Union Budget on February 1, 2025. Reports suggest that the government is mulling over cutting income tax for those who are earning up to Rs 15 lakh a year in February's budget, in turn providing relief to the middle class.

The MSME and insurance sector have pinned high hopes on the Union Budget FY 2025-26 documents and are keeping their fingers crossed regarding their expectations from the government's most important financial document of the year.

"This year from the upcoming union budget, we are hoping for a reduction in GST on health insurance from 18 per cent to 5 per cent, which could make coverage more affordable for millions of Indians. With only 37 per cent of the population currently insured, this move would encourage people to opt for higher sum insured policies, offering better financial security amid rising healthcare costs. While completely removing GST might strain insurers, a reduced rate would balance affordability for consumers and industry sustainability.

In India, small businesses face challenges due to the lack of input tax credit on vehicle insurance premiums. With 63 million MSMEs contributing 30 per cent of GDP, addressing this issue could free up resources and strengthen their resilience against risks. We urge policymakers to prioritize these reforms in the upcoming budget to build a more secure and inclusive future," said Rahul Mohata, Co-Founder and COO, Ideal Insurance.

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.