Comments of Mr. Rajesh Sud, Executive Vice Chairman & Managing Director, Max Life Insurance Company Ltd. on the Union Budget FY16-17.
The Finance Minister has presented a balanced budget with a strong push for agriculture, rural and social economy. The Union Budget also provides an impetus for job creation and entrepreneurship and has given significant attention to increasing investment in infrastructure development which will help fuel growth in the economy. The Budget clearly showcases the Government’s commitment to fiscal prudence and its intent to continue on the stated path on reduction of fiscal deficit. This is a welcome step as it will provide stability to the Indian economy in an uncertain global economic environment.
On the BFSI front, FDI through automatic route in the insurance sector is a welcome move as it will attract foreign investments in this capital intensive industry. The Finance Minister could have provided greater allocation for bank recapitalisation to promote better credit availability, which is important to support growth.
The New Pension Scheme has been made more attractive through EEE tax exemption and reduction in service tax on annuity services. In another step to promote pension sector, annuity in the hands of annuitants will be tax exempt and service tax on single premium annuity schemes has been reduced from 3.5% to 1.5%. While these developments will promote pension sector, extension of these benefits and inclusion of all pension plans in Rs.50,000 tax exemption limit, like NPS, would have further helped in creating a secured old age for many Indians. Also, reduction in service tax on pension premiums during the accumulation phase would have been an encouraging step for the sector.
TDS has been reduced from 2% to 1% on the benefit payouts from life insurance policies. This will benefit insurance customers who fall in lower tax brackets. Also TDS threshold limit on commission payout to agents has been reduced from current Rs. 20,000 to Rs. 15,000 which will lead to higher tax deduction even for agents with low income. It is suggested that the exemption limit be increased to Rs 50,000.
On the indirect tax front, the Budget proposes additional 0.5% cess on insurance premium through imposition of Krishi Kalyan Cess on all services which will take the effective service tax rate to 15%. In a country with low life insurance penetration, the additional cess makes life insurance even more expensive. The Finance Minister should consider leaving out life insurance plans which promote protection and long-term savings from this increase in cess.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Sign me up for the newsletter!
Notify me of follow-up comments by email.
Notify me of new posts by email.
Dr. Jolly Extol RSS Seva at Asian Political Leaders Conference
Indian cricketer and LaLiga India Ambassador Rohit Sharma spoke to Football presenter Joe Morrison on LaLiga Facebook Page at 8 pm on 23rd May 2020
UK Government outlines conditions for elite athletes to return to competitive training
Giving hands are better than praying hands! v Maa Krishna Kashyap, Chairperson, Punyadham Ashram
2014 The Global Indian New Network (TGINN)