Finances 2020: Insurance coverage trade expects extra tax incentives to extend penetration of life, normal cowl amongst public

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Mumbai: The insurance coverage trade is anticipating extra tax incentives to extend the penetration of life and normal cowl among the many public within the upcoming Union Finances.

In a pre-budget memorandum, the Life Insurance coverage Council has sought a separate deduction in private taxes or a rise within the current restrict for the premium paid for particular person life insurance policies.

Finance Minister Nirmala Sitharaman is scheduled to current the Finances for the monetary 12 months 2020-21 on 1 February.

“We request Finance Minister to consider a separate deduction to be provided for a premium paid on individual life policies,” Life Insurance coverage Council’s Secretary S N Bhattacharya mentioned.

If no separate deduction is offered, the present restrict of Rs 1.5 lakh, below part 80C, must be enhanced to Rs three lakh, he mentioned including, “the existing limit of Rs 1.5 lakh is too crowded with both short-term and long-term investment vying for its share.”

 Budget 2020: Insurance industry expects more tax incentives to increase penetration of life, general cover among public

Representational picture. Reuters.

Aditya Birla Solar Life Insurance coverage’s Managing Director and CEO Kamlesh Rao mentioned the introduction of a separate deduction of Rs 50,000 for first-time life insurance coverage patrons and an extra capping of Rs 50,000 for somebody buying pure safety (time period) plan will put life insurance coverage on the quick observe.

Rao mentioned reducing GST fee to 12 p.c (with enter tax credit score profit) might be useful for each policyholders and corporations.

For a pension plan issued by life insurance coverage firms, a person contribution to the pension fund is deductible below part 80CCC below the general restrict of part 80CCE of Rs 1.5 lakh.

The Finance Act 2015 inserted a brand new sub-section (1B) below part 80CCD of the Revenue Tax Act to encourage funding in Nationwide Pension Scheme (NPS) by any particular person by permitting an extra deduction of Rs 50,000 over and above the Rs 1.5 lakh accessible below part 80CCE of the Act.

“It is recommended that in order to reduce the gap between the taxation of pension policies issued by life insurance companies vis-à-vis NPS, the additional deduction of Rs 50,000 for a premium paid (as available for NPS) should be extended to pension policies issued by life insurance players,” Bhattacharya mentioned.

Bajaj Allianz Life’s Managing Director and CEO Tarun Chugh mentioned each the pension merchandise of life insurance coverage firms and pension merchandise below NPS have an analogous goal of constructing long run financial savings for assembly retirement targets, therefore, the disparity must be addressed by the federal government within the Finances.

Basic Insurance coverage Council, the physique representing non-life insurance coverage gamers, has urged the federal government to cut back items and companies tax (GST) from 18 p.c to 12 p.c.

“Insurance has become a necessity. In order to encourage risk management among people, there is a need to bring down the GST rate on general insurance products to 12 percent from 18 percent, at present,” Basic Insurance coverage Council’s Secretary-Basic M N Sarma mentioned.

The non-life gamers have additionally requested for a tax deduction of Rs 10,000 below revenue tax for insurance coverage of the residential property. ICICI Lombard GIC chief monetary officer and chief threat officer, Gopal Balachandran, mentioned normal insurers at present are at a drawback as in comparison with different monetary companies firms.

Whereas different lessons of assesses have been offered the good thing about grandfathering of all positive factors earned on such lengthy phrases capital belongings as much as February 1, 2018, this profit has not been clarified for normal insurance coverage companies.

“This is important for insurers since it will help them in maintaining solvency margins and risk mitigation against catastrophes. This will help insures to provide affordable products and cost-effective solutions to customers,” Balachandran mentioned.

Based on Star Heath and Allied Insurance coverage Managing Director, S Prakash, there are some merchandise the place medical insurance firms take extra dangers and are available ahead to cowl folks residing with the illness.

“In this segment, there can be a better concession in GST. For senior citizens, there should be an exemption from GST at least for products with a lower sum insured,” Prakash mentioned.

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