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Hinting at a shift in the investment behaviour of the middle-class in India, Finance Minister Nirmala Sitharaman on Thursday said individuals belonging to this section have diversified their portfolio in a smart way, with individual investors seeking better returns than what the traditional avenues had been offering. She also reiterated that any decision on the GST on health insurance will be taken by the GST Council and not the Parliament.
Parliamentary approval for the Budget 2024-25 culminated with the Rajya Sabha returning the Finance Bill to the Lok Sabha after the Finance Minister’s spirited reply to the debate. Following this, the Finance Bill and the Appropriation Bill will be sent to the President and will be enacted post her assent.
For better returns
The Minister highlighted the growing culture of equity investment and said household investors are seeking better returns than what the traditional avenues had been offering. “Individuals are not sitting in post offices anymore, or going for a fixed deposit. Instead, they are looking for portfolios with better returns. They are also investing in property,” she said, adding, “Today, small savings alone do not comprise the portfolio anymore. People are finding different portfolios for better returns.”
Sitharaman further said highlighted the government’ efforts to substantially reduce the tax burden on middle-class, especially at a time when many developed economies have increased tax rates. Commending the recent proposal to amend the Finance Bill and bring back indexation and the benefits attached to it as an option a ‘progressive approach’. “By giving an option, we have ensured that no one faces additional tax burden due to this change,” she explained.
Health insurance
On the issue pertaining to GST applied on health insurance premium, she said 75 per cent of the GST collected goes to States. Prior to levying 18 per cent GST on health insurance (premium), all States used to levy tax on insurance premiums. So when GST was rolled out, the tax automatically got subsumed into GST, Sitharaman said. Responding to TMC Rajya Sabha member Derek O’Brien’s question on why the GST Council had not reduced the tax levied on health insurance if the majority vote is with the NDA, the minister said the endeavour is to take all decisions in the Council with a consensus.
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