Budget 2024-25: Rationalisation of GST, tax-break on annuity top wish list of life insurers
GST rate rationalisation from the current rate of 18 per cent on life insurance term policies may also help make life insurance more affordable for the masses, who are keener on buying protection-oriented products, according to Sumit Rai, MD and CEO, Edelweiss Tokio Life Insurance.
“With the experience in the last 2-3 years, it can be viewed as a social necessity to reduce the GST burden, making the category more affordable,’‘ Rai told businessline.
While agreeing with the same, Rai said: “There is a vast ageing population, which underlines the burgeoning pension and annuity market in India. A tax break on annuity could, therefore, be a game changer.”
Currently, annuity is completely taxed in the hands of the customer, which spoils the product’s allure. “Apart from doing away the double taxation (annuities are taxed at entry and exit), the government may also consider extending the tax benefit of Rs. 50,000 offered on NPS under Section 80CCD (1b), which is over and above the Rs.1,50,000-lakh-limit of 80C, to annuities,’‘ he added.
Annuities are the only solution, which provides complete protection from the perspective of living longer (i.e. outliving one’s corpus), by providing a regular flow of income throughout one’s lifetime, purchased in lieu of a single lump-sum amount.
ife insurers have also been seeking a review of the Rs. 5 lakh cap and increasing it to Rs.10 lakh.
“The life insurance industry has been requesting for a distinct tax deduction limit, specifically for life insurance, with a special emphasis on the term insurance category, apart from the existing 80C provisions. This would serve as an incentive for individuals to invest in life insurance policies and promote a sense of long-term security,’‘ Pankaj Gupta, MD and CEO, Pramerica Life Insurance said.
