Business Desk :
The Bangladesh Insurance Association (BIA) has demanded tax exemption for health insurance in the budget for the next fiscal year.
The organisation thinks that abolishing tax on health insurance will increase premium income and the number of customers in this sector.
“Under the existing insurance law in our country, no VAT has to be paid on the premium of life insurance policy, but if a policyholder makes a policy by combining health insurance with life insurance, he has to pay 15 per cent percent VAT on the health insurance premium,” said Sheikh Kabir Hossain, president of the BIA.
“This increases the level of premium. As a result, the consumer loses interest in health insurance,” he said at a press conference on Thursday.
Mentioning that the prime minister herself has been encouraging the growth of health insurance, the BIA president said abolition of 15 per cent tax is necessary to increase the confidence of common people in health insurance.
According to various company sources, personal health insurance has increased during the Covid-19 crisis.
There is a growing awareness among people about health insurance and many people are buying health insurance policies.
Earlier, health insurance was 5-10 per cent of the total policies, but now it has gone over 20 per cent.
The BIA president said there is a provision to pay 5 per cent advance tax on the agent commission, but due to Covid-19 pandemic, all the field workers have been confined within their houses for the last three months and they have not been able to work.
In the interest of maintaining social distance, they are not able to go to the people’s doorsteps and collect premiums. Not only are they unable to increase business, but they also cannot collect the renewal premiums.
In this situation, the government should postpone the provision of 5% advance tax payment by the insurance agents for the next two financial years, said the BIA president.
The BIA also demanded that the government withdraw VAT at the source for reinsurance.
In support of the demand, Kabir Hossain said the insurance companies collect VAT at the rate of 15 per cent from the customer as soon as it receives the premium and deposits it in the government treasury.
The insurance company reinsures a portion of this premium in the interest of risk management. This is an internationally recognised system.
