Premium has to be 10% of sum assured to avail tax benefits, service tax hiked to 12%
In order to enjoy tax benefits under sec 80C and 10(10D), the actual capital sum assured will have to be 10 times the premium. Currently, the actual capital sum assured has to be 5 times the premium.
Life insurance companies will have to pay higher service tax in the next fiscal as FM increased it by 2%. Life insurance companies might pass on the increase to policyholders by increasing life and health insurance premiums.
However, the Finance Minister has promised once again to move “The Insurance Law (Amendment) Bill, 2008” in this session.
The general insurance players feel that the projected higher economic growth is good news for them as it has a direct co-relation with the growth, especially in the manufacturing sector. KG Krishnamoorthy Rao, CEO and MD, Future Generali said, “The budget provides for increased investments in infrastructure sector and highway development projects. These can lead to generation of insurance premium from these sectors. The minor changes in income tax slabs generates some more disposable income for individuals in that tax bracket, part of this may be channeled towards insurance buying.”