Financial sector players demand reduction in GST on term insurance in Budget

File image

In their pre-Budget consultations with Finance Minister Nirmala Sitharaman, stakeholders from the financial sector demanded a reduction in Goods and Services Tax (GST) levied on term insurance, in order to increase its penetration, and a streamlining of Know-Your-Customer (KYC) norms to further the cause of financial inclusion.

Representatives of the financial sector and capital markets also highlighted the need for governance changes in public sector banks (PSBs), with special focus on the PJ Nayak Committee recommendations.

"There were taxation suggestions. We have taken note of it. Taxation concerns would be addressed in given fiscal space. Inflation is still benign, credit growth is also happening. All these factors will be kept in mind," Finance Secretary Rajiv Kumar said.

With a view to give a boost to Indian markets, the representatives submitted several suggestions like enhancing credit off-take from banks, PSBs' governance, risk capital issues, improving functioning and alleviation of stress among NBFCs, an official statement said.

They also made a case for promoting leasing by reducing GST, reduction of GST rates on term insurance to increase its penetration and to provide easier credit to digitally active users by streamlining KYC norms, it said.

Demand for GST reduction comes days ahead of the GST Council meeting scheduled to be held on December 18.

Suggestions were also received for enhancing support from private banks to Stand Up India Scheme, it added.

SBI Chairman Rajnish Kumar said suggestions with regard to taxation and improvement in credit growth were made.

"We have made a suggestion to raise tax break on NPS from Rs 50,000 to Rs 1 lakh and increasing the age-limit for Atal Pension Yojana to 50 years," Pension Fund Regulatory and Development Authority (PFRDA) member (Finance) Supratim Bandyopadhyay said.

Finance Industry Development Council (FIDC) Chairman Raman Aggarwal said the over-dependence of NBFCs on banks needs to be rectified and funding sources need to be diversified.

The industry has also requested that a re-finance window for NBFCs be created under NABARD or SIDBI, he said.

Along with the Finance Minister, the meeting was attended by Minister of State for Finance Anurag Thakur, Finance Secretary Rajiv Kumar, Economic Affairs Secretary Atanu Chakraborty, Revenue Secretary Ajay Bhushan Pandey and other senior officials of the Finance Ministry.

Major stakeholders of the financial sector and capital markets who participated in the meeting includes RBI Deputy Governor NS Vishwanathan, SEBI whole-time member Madhabi Puri Buch, LIC Chairman MR Kumar, Kotak Mahindra Bank MD Uday Kotak and Max Life Insurance MD Prashant Tripathy among others.