respectively) from the 12% service tax to make these schemes more attractive.
“There is no doubt that tax breaks could help in improving the reach of insurance products, particularly when insurers can no longer offer guaranteed returns,” said Mukesh Butani, chairman and managing partner, BMR Legal.
“The basic objective of insurance is risk coverage. Except for the new generation, people do not see as much value in risk coverage as they do in a more tangible form of investment such as land or gold,” said Ernst & Young tax partner Prashant Khatore.
Recommendations from experts and a Parliamentary panel to raise the personal income tax exemption limit to Rs 3 lakh from the current Rs 2 lakh is also under consideration, although the current limit is in line with the structure proposed in the Direct Tax Code. If accepted, this proposal could help boost consumption in the economy and make taxation more fair to under 10% of the 120 crore people who pay taxes.