do away with the service tax (12.36% including education cess) on micro-insurance products to take forward the financial inclusion programme and increase insurance penetration especially among the rural and urban poor. A micro-insurance policy is a life or general insurance policy where the sum assured is Rs 50,000 or less. On health insurance, currently while an individual can avail a maximum deduction of Rs 15,000 (including for the assessee, spouse and children) under Section 80D (of the I-T Act), for senior citizens the permissible benefit is Rs 20,000.
An additional deduction of Rs 15,000 can be availed by an individual for premium paid for parents (the limit is Rs 20,000 if either of the parents are senior citizens or both are senior citizens). The DFS has suggested that the deduction limit be increased to Rs 50,000 for individuals (including the premium paid for spouse, children and parents whether or not they are senior citizens/dependents) and for senior citizens the limit be hiked to Rs 40,000.