SECP Advocates for Income Tax Credit for Insurance Products

SECP Advocates for Income Tax Credit for Insurance Products – The Securities and Exchange Commission of Pakistan (SECP) has put forward a proposal for the upcoming 2024-25 budget, advocating for the introduction of income tax credits for individuals purchasing insurance products.

This initiative aims to enhance the accessibility and attractiveness of insurance, thereby benefiting a larger segment of the population.

The SECP emphasized that life insurance serves as a crucial savings and investment tool for the public, offering long-term financial security. Additionally, health insurance plays a vital role in providing access to quality healthcare services, alleviating the government’s burden in offering health services to the general populace.

“Life insurance is a key saving and investment vehicle available to the public at large,” the SECP noted. “Health insurance provides access to quality healthcare and helps reduce the government’s burden of providing health services for the general public.”

The commission proposed that taxpayers who invest in life and health insurance should be eligible for a small income tax credit. This measure is intended to encourage more people to opt for these insurance products, promoting a culture of savings and ensuring broader access to healthcare.

The SECP proposal extends beyond just life and health insurance. It advocates for income tax credit incentives for individuals on all personal lines and micro-insurance products. This move aims to support the growth of the micro-insurance sector, which offers affordable insurance solutions to low-income individuals and small businesses, thereby reducing the cost of protection for Pakistani citizens.

“Through a small income tax credit for taxpayers buying life and health insurance, the practice should continue to be encouraged by all possible means so that this relief may be availed by a broad spectrum of our population,” the SECP stated.

The SECP believes that these tax incentives will not only bolster the insurance sector but also contribute to the overall economic stability by promoting financial inclusion and protection. By reducing the financial barriers to obtaining insurance, more individuals, especially those from low-income groups, can benefit from the security and peace of mind that insurance provides.

The proposal is expected to be discussed in detail during the upcoming budget sessions. If implemented, it could mark a significant step towards a more inclusive financial system in Pakistan, where a greater number of people are protected against unforeseen financial hardships.

Stakeholders and industry experts are optimistic about the potential positive impact of these measures, anticipating that they will lead to increased insurance penetration and contribute to the overall welfare of the population. The SECP encourages policymakers to consider these recommendations seriously, as they promise long-term benefits for both the economy and the citizens of Pakistan.