Budget wish- Insurace Sector

 

The insurance sector feels that in the upcoming
Union budget finance minister, Pranab Mukherjee
should eitherprovide a separate limit for tax benefits under Section
80C of Income Tax Act for investment in long-term
saving instruments, such as insurance or increase the 
present limit of Rs 1 lakh to Rs 3 lakh. The industry is
also opposing the proposed exempt-exempt-tax (EET)
system for insurance sector, which is at its ‘nascent stage’ in India.

Heads of most insurance companies have also
demanded that the Insurance Bill be passed this year,
allowing for 49 per cent foreign direct investment (FDI)
in the domestic insurance sector. At present, only 26 per cent FDI is allowed.

T R Ramachandran, CEO and MD of Aviva India, said,
“We would recommend a separate limit for deductions under
Section 80C for long-term saving instruments, such as life
insurance and pension funds. The deduction under Section
80C also includes short-term saving instruments such as mutual
funds and fixed deposits.”

Deepak Sood, CEO and MD of Future Generali India Life Insurance,
said, “There should be a separate limit for pension plans not inclusive of
Rs 1 lakh limit under Section 80C. This is primarily in view of regulation
of separate pension plans. Besides, under 80C, the limit of Rs 1 lakh should
be raised to Rs 3 lakh to mobilise funds for long-term infrastructure development.”

Under Section 80C of Income Tax Act, one can claim tax deduction of
Rs 1 lakh for investments in savings instruments. The industry is also
demanding that the present limit under Section 80D on health insurance
to be raised from Rs 15,000 to 25,000.

GV Nageswara Rao, CEO and MD of IDBI Fortis Life Insurance, 
said life expectancy has improved and lifestyle diseases are becoming
common. For that reason it has become imperative for people to save
for a comfortable life after retirement. “Annuity received under a pension
n of annuity from tax would be the second item on the wishlist in this budget,” he added.

Amarnath Ananthanarayanan, CEO of Bharti AXA General Insurance,
said, this could give a boost to the health insurance business, especially
to expensive and niche plans. “We think the consumers would take this
benefit and go for higher sum insured and coverage to take care of
healthcare inflation,” he added.

Sood of Future Generali also said that with increase in inflation,
the government must raise the tax deduction limit on health insurance.

Among the other demands, the industry wants the EEE
(exempt-exempt-exempt) tax structure to continue on insurance
investment. Under EEE system, the investment, interest earning
and redemption are all tax-free.

Harpal Karlcut, CEO, Canara HSBC Oriental Bank of Commerce
Life Insurance, said the EEE system should continue in life insurance
to encourage long-term savings.

Several insurance heads expressed their hope that the budget
would give a push to passing the Insurance Bill.

Kapil Mehta,MD & CEO, DLF Pramerica Life insurance, said, “We
would expect the insurance bill to be passed this year which
will bring in much needed capital to the industry.”
The insurance companies are charged service tax of
10 per cent on all charges including mortality charge and
commission paid to the agents, while the same
is zero in case of mutual fund industry.