The finance ministers announcement that the insurance bill will be considered in this session is a great boost to the insurance industry. It will empower Irda to introduce forward looking regulation to promote sustainable growth of the industry. The bill gives a lot of flexibility to Irda in framing regulations.
The life insurance industry has been asking for pension annuities to be made tax-free. We are disappointed that the demand has not been met. However, we are happy that the basic exemption limit for senior citizens has been increased. Senior citizen age limit has been reduced to 60 years with basic exemption limit of R2.5 lakh and a 'very senior citizen' category has been introduced at age 80 years and above with exemption limit of R5 lakh. This will help the seniors to enjoy pensions in the retirement years without tax impact if they are within exemption limit. But to develop the pension market fully, annuities need to be made tax-free. We hope that the DTC will ensure this. The Budget has made a modification in the service tax on fund management charges, due to which some of the guaranteed Ulips would attract higher charges. However, guaranteed products would continue to be attractive to customers.