Give tax sops to consumers to retain savings: HDFC Life

Providing tax incentives to consumers would help retain domestic savings in India.
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Mar 01, 2013, 12.22 PM | Source: Moneycontrol.com

Give tax sops to consumers to retain savings: HDFC Life

Providing tax incentives to consumers would help retain domestic savings in India.

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Give tax sops to consumers to retain savings: HDFC Life

Providing tax incentives to consumers would help retain domestic savings in India.

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Vibha Padalkar (more)

ED & CFO, HDFC Life | Capital Expertise: Insurance

Life insurance premiums may get separate limits of deductions u/s 80C, 80CCC in case of the individual tax assesses

- Vibha Padalkar (ED & CFO)

Moneycontrol Bureau

Providing tax incentives to consumers would help retain domestic savings in India.

The finance minister should grant separate sub-limits for insurance plans; this will help spur financial savings, which have been declining over the last few years, Vibha Padalkar, CFO HDFC Life told moneycontrol.com citing her expectations from the upcoming Budget.

On the taxation front, reduction in the service tax for single and first year premiums may be granted . Also, there is possibility overall reduction in tax rates.

Below is the edited transcript of Vibha Padalkar's interview

Q: Are you expecting any major announcements on FDI in insurance in the Budget?

A: With the Cabinet approving the proposal to hike the foreign investment ceiling in the Insurance sector to 49%, the Insurance Laws (Amendment) Bill is likely to be taken up for passing by Parliament. The regulator and the Government are keen to increase foreign investments in the insurance sector. However, whether this and other reforms actually happen in the current budget session depends on the agreement between the leading political alliances over the next few weeks.

Q: Do agree you that providing tax incentives to customers (like a separate sub-limit for long-term savings) will help spur demand for insurance products?

A: The share of financial savings has been declining over the last few years. Savings are reducing and a majority of those savings are moving to physical assets such as gold and real estate which has an impact on the macro-economic policies.

It is a paradox that domestic savings are used for importing gold even as foreign investors are investing their savings into our markets. Tax incentives to consumers such as separate sub-limits for insurance plans would help to retain domestic savings in India and give a fillip to financial savings.

Q: Are you expecting the Government to announce any major changes in the insurance tax laws for instance the corporate tax or service tax?

We expect reduction in the service tax for single and first year premiums. We also are anticipating the overall reduction in tax rates. In case of Income tax, life insurance premiums are expected to get separate limits of deductions u/s 80C, 80CCC in case of the individual tax assesses which will boost the Insurance sector.

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