Rajesh Sud Reaction on Budget 2012
DSIJ Intelligence / 17 Mar 2012
At a macro level the Union Budget 2012-13 is a balanced one. The Finance Minister has taken step to create an environment for sustainable growth. The marginal increase in exemption limit on personal taxation to Rs 2 lakh and realignment of tax slabs would leave more money in the hands of the consumers. However the increase in exemption limit is lower than expected especially given high inflation rate.
Finance Minister's assurance that Insurance Amendment, Pension and Banking Bills will be presented in this session, shows his commitment towards reforms in financial services sector.
With respect to the life insurance sector the recommendations related to tax exemption under 80 C and 10 (10D) and increase in service tax would bear a substantial impact. The service tax on first year premium would increase from 1.5% to 3% of the gross premium. This will result in having different amounts for the first year premium and renewal premium, thus resulting in administrative challenges.
The new tax exemption eligibility condition under section 80 C and 10 (10D) has been revised from the previous sum assured to multiple of 5 times to 10 times. While this is consistent to the life insurance industry thought, it is a substantial change to be implemented in such a short time frame and hence we would like to appeal for more time.
By Rajesh Sud
CEO and Managing Director of Max New York Life Insurance
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