Comments
The insurance industry wants the government to create a separate tax exemption limit of Rs 50,000 for life insurance premium in the forthcoming budget to encourage more individuals to buy such policies.
“It is suggested that a standalone additional exemption limit of Rs 50,000 (over and above the already existing limit of Rs 1,00,000) be specified for (life) insurance premiums alone under the Income Tax Act,” said Mr Anuj Mathur, Chief Financial Officer, Canara HSBC OBC Life Insurance.
Currently investment in saving instruments, like risk cover, pension products, PF contributions, National Savings Certificates and others, are eligible for aggregate deduction of Rs 1 Lakh. Besides, investments in infrastructure bonds up to Rs 20,000 also qualify for deduction.
“We recommend a separate limit for tax exemption for long-term saving instruments like life insurance or increasing the limits on life and health insurance premium could be looked at,” said Mr Rajesh Sud, MD & CEO, Max New York Life Insurance.
Mr Mathur said in order to ensure better insurance penetration, the life insurance companies should be allowed to come under the Exempt, Exempt, Exempt (EEE) bracket. Under EEE, a policy holder gets tax exemption at various stages during the term of the policy.
Insurance sector needs capital on a periodic basis for expansion and experts hope that the budget session would also see passage of FDI bill in insurance sector to 49 per cent, from the current 26 per cent.
“There is a need for more proactive regulatory architecture for insurance. Foreign insurers could be allowed to set—up under a wholly owned subsidiary with 100 per cent FDI. The life insurance industry is very capital intensive and companies need huge capital to fund growth,” said Mr Naresh Makhijani, KPMG Executive Director.
The life insurance companies currently pay tax of 12.5 per cent and the Direct Taxes Code, which would replace the archaic IT Act from April 1, 2012, does not specify any specific limit for the same. This would mean being taxed at 30 per cent.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.