homefinance NewsIndia to list Finance Bill in Lok Sabha today, life insurers hope for relief on Budget taxation proposals
India to list Finance Bill in Lok Sabha today, life insurers hope for relief on Budget taxation proposals
The Indian government is all set to list the Finance Bill for consideration in the Lok Sabha tomorrow. This bill is expected to have a significant impact on various sectors, including the insurance industry.
The Indian government is all set to list the Finance Bill for consideration in the Lok Sabha on Friday. This bill is expected to have a significant impact on various sectors, including the insurance industry. A finance bill would carry any changes to Budget proposals and insurance companies are particularly looking at any relaxation being given on the taxation front.
Life insurers are hoping that the government will consider amendments to the taxation of large life insurance savings policies.
Budget 2023-2024 proposed that life insurance policies with a premium exceeding Rs 5 lakh annually will be taxed. The new proposal will, however, not impact taxation of unit-linked insurance plans (ULIPs), term insurance and old policies.
This means that if premium paid by an individual for a savings life policy is more than Rs 5 lakh than on maturity the income from policy will be taxed. The threshold of Rs 5 lakh will be applicable on first year premium and not first year + renewal.
This announcement has raised alarm bells among life insurers who have sought relief from the government.
Life insurers have requested the government to increase the threshold for taxation on life insurance policies from Rs 5 lakh to Rs 7-10 lakh. This move, they believe, will provide much-needed relief to policyholders who have invested in large life insurance policies.
In addition to this, life insurers have also requested the government to introduce an indexation benefit for the taxation of life insurance policies. This benefit will ensure that the tax liability is calculated based on the inflation-adjusted value of the policy. This will not only reduce the tax burden on policyholders but also encourage more people to invest in life insurance policies.
Indexation, if given, will be a major positive as far as insurance companies are concerned, experts believe.
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(Edited by : Anshul)
First Published: Mar 23, 2023 4:55 PM IST
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