Expectations of Life Insurance Council and Insurers from Union Budget 2020

Life Insurance Council, is the face of the Life Insurance Industry that connects the various stakeholders of the industry. It functions together with participation of all the Life Insurers through several sub-committees towards development of the industry. The Life Insurance Council leads the advocacy effort on the industry’s behalf before the Regulator (IRDAI), Govt. of India and all other statutory bodies. It is a consortium of 24 life insurance companies. Let’s have a look on the expectations of the business leaders: 

Mr S N Bhattacharya, Secretary, Life Insurance Council says “For a pension plan issued by life insurance companies, an individual contribution to the pension fund is deductible under section 80CCC under the overall limit of section 80CCE of INR 150,000. The Finance Act 2015 inserted a new sub-section (1B) under Section 80CCD of the Income Tax Act to encourage investment in NPS by any individual by allowing an additional deduction of INR 50,000 over and above the INR 1.5 lakhs available under Section 80CCE of the Act. It is recommended that in order to reduce gap between taxation of pension policies issued by Life Insurance Companies vis-à-vis NPS of the CG, the additional deduction of INR 50,000 for premium paid (as available for NPS) should be extended to pension policies issued by Life Insurance Companies.

Mr S N Bhattacharya, Secretary, Life Insurance Council says “Life insurance meets the twin needs of providing protection as well as long-term savings with the goal of meeting living needs. It is particularly needed in the absence of the Government’s social security scheme that is present in many global economies. We request that Honorable Finance Minister Ms. Nirmala Sitharaman consider a separate deduction to be provided for premium paid on individual life policies. If no separate deduction is provided, the existing limit of INR 1,50,000 (i.e. section 80C) should be enhanced from INR 1,50,000 to INR 3,00,000, since the existing limit of INR 1,50,000 is too crowded with both short-term and long-term investment vying for its share.” 

Mr. Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance says “In the upcoming budget, we expect the government to focus on bringing more people under the ambit of Life Insurance, promote long-term savings and encourage capital formation. In a country with inadequate social security, protection offered by life insurance is inevitable; however, lack of its penetration is plaguing the industry.  Introducing separate deduction of Rs 50,000 for first time life insurance buyers and an additional capping of Rs 50,000 for someone purchasing a pure protection (term) plan will put life insurance on fast track. Another important move would be to encourage women to insure their lives and savings. 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 annual premium will be a desirable move. The budget should also bring about measures to bring parity between pension products offered by life insurers and NPS. Lowering rate of GST at 12% (with input tax credit benefit) will be beneficial for both policyholders and companies. These measures will pave the growth path for the LI sector, besides increasing the security net of the nation’s people at a very low cost.”

Tarun Chugh, MD & CEO, Bajaj Allianz Life says “Collectively as an industry, we do see a lack of parity in the tax treatment of pension products of life insurance companies and pension products under National Pension Scheme (NPS). Both the products have similar objective of building long term savings for meeting retirement goals, hence, this disparity should be addressed by the government in the Union Budget 2020. Further, in order to enable customers to see life insurance beyond a tax saving tool and invest in it to fulfill their long term financials goals, the government should either consider a separate deduction section or enhance to limit under Section 80C of Income Tax Act, 1961, to INR 3,00,000, since the current limit of INR 1,50,000 is too low to cater to all the contributions it covers.”

About Neel Achary 19658 Articles
Neel Achary is the editor of Business News This Week. He has been covering all the business stories, economy, and corporate stories.