Justifying the demand, the industry chamber in its pre-Budget memorandum has said that while corporate tax rates have been reduced from around 60% to 30%, the tax rate on insurance companies has remained at 12.5%.
It is thereby desired that the rate be reduced in tandem with the reduction in the corporate tax so that insurance companies are able to reward their customers by way of additional bonus or lower premia rate, the apex chamber said.
Ficci memorandum, which has already been submitted to the finance ministry, said that earnings from different operations of business should be considered in its entirety as derived from life insurance business and thus be taxed at a uniform rate of 7.5% in line with current corporate tax base.
The chamber has also said that as the insurance industry has a long gestation period of more than five years, the provisions containing carry forward and set off of losses should be made applicable here also.
Ficci has also suggested that fringe benefit tax (FBT) provisions on the insurance sector should be abolished. Alternatively, at least superannuation should be kept outside the purview of FBT.