Insurance industry seeks tax exemption
Mumbai: Given that India's insurance penetration is much below the world average, the industry expects the government to incentivise investments made in insurance by relaxing investment restrictions on life insurers to facilitate better fund performance, scaling up income tax exemptions under Sec 80C for life insurance, besides pitching for lowering GST on life insurance products to 12 per cent. The insurers also want the government to establish parity between retirement products and the National Pension Scheme (NPS) by including all retirement products under section 80CCC.
The existing GST rate on insurance policies is at 18 per cent.
Prashant Tripathy, Managing Director and Chief Executive of Max Life Insurance said, "The government should announce incentives that would render a stronger attraction towards financial protection, such as lowering GST on life insurance products. It should scale up income tax exemptions under Sec 80C to further incentivise behavior towards financial savings and life insurance purchase."
"The government should also streamline defined income in retirement years for Indians by establishing parity between retirement products and National Pension Scheme (NPS) by including all retirement products under section 80CCC," added Tripathy.
Life insurance is the second most preferred mode of savings for households, next only to bank deposits and is a source of long-term investments required for infrastructure as a result the government could relax investment restrictions.
With floods and natural calamities causing damages to lives and property, the government should create a separate section for an income tax deduction on home insurance premium similar to Section 80 D for health insurance.