India’s life insurance industry wants Union Finance Minister Nirmala Sitharaman to raise tax incentives in the upcoming Union Budget 2020-21. They also seek additional provisions for women to encourage their participation.
“We request the Finance Minister to consider a separate deduction to be provided for premium paid on individual life policies. If no separate deduction is provided, the existing limit of Rs 1,50,000 under Section 80C should be enhanced to Rs 3,00,000,” said S N Bhattacharya, secretary, Life Insurance Council. Quite recently, he had called on the Finance Minister in New Delhi on the issue.
Life Insurance Council, the official representative of the life insurance industry that generated over Rs 6 trillion of premium in FY 2018-19, has also recommended that in order to reduce the gap between taxation of pension policies issued by life insurance companies and the National Pension Scheme (NPS), the additional deduction of Rs 50,000 for premium paid, as available for NPS, should be extended to pension policies issued by life insurance companies.
“Collectively as an industry, we see a lack of parity in the tax treatment of pension products of life insurance firms and pension products under NPS. Both the products have a similar objective of building long-term savings for meeting retirement goals. Hence, this disparity should be addressed,” said Tarun Chugh, MD and CEO, Bajaj Allianz Life.
Another important move would be to encourage women to insure their lives and savings, said Kamlesh Rao, MD and CEO, Aditya Birla Sun Life Insurance.
“Extra tax benefit for women policyholders will be a significant step. Moreover, relaxation of Section 10(10)(D), where minimum sum assured is required to be 10 times of the annual premium, will be a desirable move.”
RM Vishakha, MD and CEO, IndiaFirst Life Insurance, said that an appreciation of economic value contribution by women will automatically lead to an improvement in the sum assured in insurance.
Insurers also opined that lowering rate of GST at 12 per cent (with input tax credit benefit) will be beneficial for both policyholders and companies.