Budget expectations: Insurance

21 Jan 2022 , 06:05 PM

In the wake of Covid19 pandemic, insurance has emerged as the most essential tool to secure the family from financial uncertainty. The industry has long pending expectations from the policy makers for incentivizing people to get life insurance by giving a separate deduction limit of minimum INR 1 lakh for insurance premium payment under Section 80C.

Also, pension products should be given parity with NPS in tax incentives. Further, for annuity products, deduction for principal component should be allowed and only the interest accretion should be taxed similar to fixed deposits. Suitable changes should also be made under section 10(10D) to allow exemptions for all Life Insurance products where life insurance coverage is present which may be on the basis of policy term and sum assured ratio.

These tax incentives will not only boost financial security and stability for citizen of India at large, but will also align with Government’s ambition to achieve 5 trillion economy in coming years.

Further even though GST is not covered under budget, however policy makers’ should also look towards exempting or lowering GST rates on life insurance products and these should ideally be classified under essential product category.

The author of this article is Mr. Tarun Rustagi, Chief Financial Officer, Canara HSBC OBC Life Insurance

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com