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Last Updated : Jan 25, 2017 03:02 PM IST | Source: Moneycontrol.com

Budget 2017: Separate exemption limit for insurance under sec 80C a must

With the social fabric of the country undergoing changes, it is imperative to encourage the lower/ middle income segments to provide for their own security.

Rushabh Gandhi

India’s GDP growth picked up from 7.24% in 2014-15 to 7.56% in 2015-16. For 2016-17, various economic surveys peg an estimate of similar growth.
Last year’s Union Budget set the stage for the government’s development agenda, and carried forward the reforms programme. The budget aptly emphasised on stimulating demand in the economy. The government will have to continue playing the role of a catalyst to give further boost to the economy.

We look forward to the following developments from the forthcoming budget:

1. Widening the tax net
The government needs to take steps to improve the tax to GDP ratio. This can happen by widening the tax net, which in turn can happen by simplifying the tax laws.
Certain possible budget outcomes could be:
• Decrease in income tax rates including peak rate
• Increase in income tax slabs
• Increase in income tax exemptions

2. Enhanced deduction of life insurance premium under Section 80C of the Income Tax Act

Currently, components such as mandatory employee provident fund deduction, principal repayment of housing loan, tuition fees and stamp duty / registration on purchase of property, form an integral part of the overall 80C limit.

With the social fabric of the country undergoing changes, it is imperative to encourage the lower/ middle income segments to provide for their own security. An easy way of doing this would be by providing for a separate exemption limit of Rs 1 lakh for life insurance premium over and above the current Rs 1.5 lakh.

3. Enabling social security

In India, it is expected that over 30 crore people will be above 60 years of age by 2050. It is imperative to take necessary measures to create a social security framework.

Contribution to pension policies of life insurance companies, should be treated the same as contribution to NPS as both these products are to help individuals save for their retirement. Additionally, at present all annuity pay-outs are treated as income and taxed. This should be exempted from tax under section 10.

The author is director- sales & marketing, IndiaFirst Life Insurance
First Published on Jan 23, 2017 06:08 pm
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