Budget 2020: Annuities from life insurance should be made tax free, says Kotak's G Murlidhar
Budget 2020: The government should look to include a separate limit for tax deduction in addition to Rs 1,50,000 available under section 80C and declare annuities from life insurance tax free, believes G Murlidhar, Managing Director, Kotak Life Insurance.
Budget 2020: The government should look to include a separate limit for tax deduction in addition to Rs 1,50,000 available under section 80C and declare annuities from life insurance tax free, believes G Murlidhar, Managing Director, Kotak Life Insurance. For those unaware, annuity is a series of payments made at equal intervals in the form of regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments, among others.
"Some constructive steps which can create the right environment include creating a separate limit for tax deduction in addition to Rs.1,50,000 available under section 80C, and making annuities from life insurers tax-free," Murlidhar said.
Giving an example of the National Pension System, he demanded parity in tax treatment of pension products across all investment platforms by providing separate limit for life insurance products.
"Ensuring parity in tax treatment of pension products across all investment platforms by providing deduction limit for life insurance pension product similar to NPS under section 80CCD and waiving GST on annuity purchased out of maturity of pension policies in line with NPS, will further aid in mobilizing long-term savings," he added.
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As of now, the life insurance products fall under Section 80C of the income tax which gives benefit up to Rs 1.5 lakh, though a large part of that is taken away by other instruments such as Public Provident Fund, EPF and others. Murlidhar believes that life insurance industry can help government’s efforts towards the growth objectives.
"Households prefer life insurance for building long-term savings for various life goals and retirement needs. Life insurance industry also plays a significant role in nation-building through investment in government securities (holding Rs.12 tn or 21% of outstanding central government securities) and long-term infrastructure investments (Rs. 3.9 tn). The industry can supplement the government’s efforts towards the growth objectives," he said.
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