The life insurance industry has urged the finance minister to relook tax regulations, including the proposed Direct Taxes Code (DTC) Bill 2010, which they claim would be detrimental to the interests of individual policyholders.
?The current tax regulations for the insurance industry need review and clarity. There are significant grey areas in the income-tax regime for insurance companies. Currently, this has created avoidable litigation, delay and distraction to the industry. These ambiguities need to be clarified and resolved. We hope the budget will address these concerns,? said V Srinivasan, chief financial officer, Bharti AXA Life Insurance.
?The indirect tax guidelines have made a provision for Cenvat credit only of 80%, whereas it should be 100% as is the case in other industries. This is arbitrary and not aligned with the stage of development of the Indian insurance industry. We hope the Budget would address the issue,? he said.
SB Mathur, general secretary, Life Insurance Council, said: ?Under the proposed DTC Bill, deduction for payment towards a typical life insurance cover is allowed if the premium paid in any of the year during the policy term does not exceed 5% of the capital sum assured under the policy. This proposed cap of 5% will deny benefits to large number of policyholders.?
Prashant Sharma, chief investment officer, Max New York Life Insurance, said: “In the year gone by, two things that stick out and need to be addressed in the union budget are – policy measures to encourage investments and the governments? move to cut expenditure and adopt fiscal prudence. The fiscal deficit will be significantly higher than budgeted compared to FY2011 and expected to overshoot compared to the budget estimate of 4.6%. The government is likely to project reduction in fiscal deficit partly by cutting expenditure growth and partly by increasing tax revenues. Clearly, there is a need for implementation focus and the finance minister should address that concern in his budget speech.?