Life insurance industry head honchos feel that the ministry must review the tax norms announced in the budget.
IRDA Chief Hari Narayan will reportedly meet FM Mr. Pranab Mukherjee on April 4, seeking the revision of the two tax norms announced in the budget. The industry feels that these norms can make the situation even more challenging for an industry which is going through a tough time.
The IRDA Chief has hence stepped in an effort to remedy the situation. Top of the agenda in the meeting is said to be the revision of the tax rebate that is applicable only if the minimum sum assured is 10x the annual premium and the 18% minimum alternate tax (MAT) to be levied on insurers.
Industry experts are hopeful that this
meeting will be fruitful. “The life insurance industry is in doldrums already,
and if 18 percent MAT is imposed on us, it will be difficult for us to run the
business. It takes a minimum of 12 years for a life insurance company to
breakeven, but such norms will extend it to 17 years. It is a bad situation for
policyholders as well – middle-aged policyholders will be doubly-disadvantaged,”
said a CEO of a large life insurance company.