Insurance stocks: The insurance shares jumped on February 1 after the Finance Minister increased the FDI (FDI) from 74 percent to 100 percent in the insurance sector. Shares of HDFC Life, LIC, New India Assurance, SBI Life, ICICI Prudential Life and Star Health have increased by 3 per cent. On 1 February, Finance Minister Nirmala Sitharaman released the Union Budget 2025-26. In his speech, Sitharaman said that this increased limit will apply to investors who will invest their entire premium in India. Sitharaman said that the existing FDI guidelines would be reviewed later and simplified by quad rails.
Moody’s Ratings said that increasing the FDI limit in the insurance sector may improve the profit margin, adequate capital, financial reserves may be strong and the new listing in this sector could be encouraged. Insurance companies were also hoping that the budget would give better financial facilities through FDI (FDI). The government had earlier proposed amendment to the Insurance Act 1938 to increase the FDI limit and now it has finally announced it.
BUDGET 2025: Fiscal Deficit Taria 4.4%, Net Market Browing can be Rs 11.54 lakh crore in FY 2026
Axis Securities Analysts in their budget-pre-analysis suggested cuts in GST rates to make health and term insurance more economical, as well as suggested an edge in the tax exemption limit to encourage insurance policy procurement. However, the Finance Minister did not consider these during the 2025 budget.
Apart from this, the Finance Minister also said that a new Income Tax Bill will be introduced next week. Analysts will keep an eye on whether there is any amendment in the tax exemption limit.
Experts had suggested to increase the deduction limit given under section 80D for all taxpayers to Rs 50,000 and Rs 1 lakh for senior citizens. Section 80D of the Income Tax Act, 1961 allows people to claim tax deduction for health insurance premiums.