Life insurance industry says this could help increase penetration.
IRDA has reportedly suggested additional tax exemption in its latest meeting with the FM. During the meeting, the ministry was recommended the introduction of a separate income tax exemption limit of Rs 50,000 for premiums. This tax exemption will help insurers to reinforce the advantages of insurance products as tax-saving instruments, said a senior retired official of the industry.
Currently, investments in instruments like insurance policies, pension plans, provident fund, National Savings Certificates are eligible for combined deduction of Rs 1 lakh. But earlier, consumers could claim tax exemption separately on pension. The ministry is also evaluating to re-introduce it as it could boost the pension industry.
IRDA has collected the recommendation of insurers on this agenda and submitted to the ministry.
“The ministry along with IRDA will be approaching the income tax department of the finance ministry for consideration of the tax exemption proposal,” said CEO of a private life insurance company.