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We would recommend a separate limit for deductions under Section 80C for long-term saving instruments such as life insurance. Currently, the Rs 1 lakh deduction under Section 80C also includes short-term saving instruments such as mutual funds and fixed deposits. Life insurance and pensions are the only segments of financial services that address the needs of individuals in the long-term.

Hence, the Government should look at encouraging people to save for long-term by providing a separate limit for long-term savings.

Carry forward of losses Insurance business is a long-term gestation business. Currently, we are allowed to carry forward losses for only eight years.

Most insurers do not make profit even in the 10th year. Hence, the period for carry forward of losses should be increased to 12 years.

T.R. Ramachandran, Managing Diretor and CEO, Aviva Life Insurance

More Stories on : Income Tax | Life Insurance

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