Millennium Post

FM suggests tax benefits for life insurance holders

Life insurance policyholders can look forward to more tax concessions with Indian Finance Minister P Chidambaram asking the revenue department to look into the possibility of removing service tax on first premium and creating separate exemption limit for pension schemes.

Chidambaram said he has asked the Central Board of Direct Taxes [CBDT] and Central Board of Excise and Customs [CBEC] to give their report on the changes in the tax structure for life insurance companies by 10 October.

The slew of incentives being considered by the finance ministry for boosting life insurance industry include reduction in service tax on first premium, separate tax exemption limit for pension plans and greater incentives for agents selling policies.

The ministry has formulated this proposal following a review of life insurance sector in consultation with heads of various companies and chairman of Insurance Regulatory and Development Authority [IRDA] J Hari Narayan.

The CBEC will be requested to examine whether service tax may be assessed to realisation basis, he said. At present, service tax is levied on premium on accrual basis.    
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