The finance minister also increased limits on tax exemption, annual PPF ceiling and tax benefits under 80 C.
The much awaited demand of increasing the limit of Foreign Direct Investment (FDI) in insurance has finally come true after six years. Union Finance Minister Arun Jaitley announced to raise limit of FDI in insurance from 26% to 49% during his budget speech today. However, the minister has clarified that the management control will rest with the domestic insurers.
While addressing the house, Jaitley expressed his concern over decreasing insurance penetration and said that the benefit of insurance has not reached a large section of the population. He said, “The insurance sector is investment starved and several sectors of the insurance sector need an expansion. FDI in insurance will infuse capital in insurance sector and boost its adequacy.”
Earlier in May, the representatives from Life Insurance Council, General Insurance Council and insurance players met the finance minister to discuss the issues related to the capital needs of the insurance sector.
Meanwhile, the minister has also expressed his intention to provide necessary incentives like tax benefit in REIT and Infra Investment Trust. The minister said that such move can reduce pressure on banks and will have multiplier effect on job creation.
Other key highlights of union budget FY 2014-15:
- Ambitious target of achieving a fiscal deficit of 4.1% in current financial year, 3.6% in FY 2015-16 and 3% in FY 2016-17.
- Achieving a sustained GDP growth of 7-8% in the next 3 years.
- Increased sealing limit of PPF by Rs. 50,000 to Rs. 1.5 lakh.
- Reintroduced Kishan Vikas Patra for unplanned small savings scheme.
- Raised income tax exemption limit to Rs. 2.5 lakh for individual and Rs. 3 lakh for senior citizen.
- Increased the investment limit under section 80C of the Income Tax Act to Rs.1.5 lakh.
- Hiked the deduction limit on account of
interest on loan on self-occupied house property from Rs. 1.5 lakh to Rs. 2
lakh.