The shares of insurance companies took a knock following Finance Minister Nirmala Sitharaman's renewed thrust for the new tax regime, where deductions are not allowed, in Budget 2023-24. The government also announced it will disallow deductions in certain cases.
“(A) proposal…is to limit income tax exemption from proceeds of insurance policies with very high value,” Sitharaman said.
The budget explained that where the aggregate of premium for life insurance policies (other than ULIP) issued on or after April 1, 2023 is above Rs 5 lakh, income from only those policies with an aggregate premium of up to Rs 5 lakh shall be exempt.
“This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till March 31, 2023,” said the document.
Life Insurance Corporation (LIC) fell 4 percent, SBI Life Insurance was down 7 percent, ICICI Prudential Life Insurance 6 percent, and HDFC Life Insurance was down nearly 9 percent.
General Insurance was also down 6 percent and ICICI Lombard General Insurance about 0.5 percent. Star Health and Allied Insurance were up about a percent. Follow our live blog for the latest Budget 2023 updates
Analysts tracking the sector said the push for the new tax regime will be detrimental to the business of insurance companies. As many taxpayers take insurance policies only to take benefit of Section 80C deduction, they will not be inclined to do so under the new tax regime.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
