Quote on Budget Expectation by Mr. Ajit Banerjee, Chief Investment Officer of Shriram Life Insurance
Below the Quote on Budget Expectation by Mr. Ajit Banerjee, Chief Investment Officer of Shriram Life Insurance
As the Union Budget scheduled for February 1 approaches, the insurance sector eagerly anticipates measures that will address critical challenges and promote financial inclusion. A key expectation is the introduction of a separate tax exemption for term insurance. With term insurance gaining popularity as a cost-effective way to secure substantial life coverage, a distinct tax exemption limit could incentivize more individuals to adopt it, thus reducing the protection gap and ensuring financial security for families.
Another pressing issue is the affordability of insurance products. The existing 18% GST on premiums acts as a deterrent, particularly for low-income groups. A reduction in the rate will make insurance products more affordable, directly benefiting policyholders and increasing insurance penetration.
While the GST Council has deliberated on this matter, a favourable decision in the budget would be a game-changer for the sector.
Additionally, the taxation framework for annuity products needs revisiting. Although the initial investment in an annuity is tax-exempt, the annuity income is taxable, discouraging investments in retirement-focused products. Aligning the tax treatment with the product’s purpose would encourage retirees to secure their financial future.
Similarly, the insurance industry has been requesting to carve out the insurance premium paid for life from the existing limit of Rs 1.5 lakh available under section 80 C into a separate section. This would provide greater incentive to individuals to adequately take cover.
These measures can collectively enhance the sector’s growth and ensure wider financial inclusion.
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