Budget 2015: Change tax laws to make pensions, annuities plans attractive

The finance minister in his maiden budget speech had announced the concept of universal KYC and a single demat account across asset classes.

hidden February 24, 2015 13:06:31 IST
Budget 2015: Change tax laws to make pensions, annuities plans attractive

By Deepak Mittal

At various forums, the government of India has expressed its eagerness to boost the financial savings in the country. The insurance industry is one of the best placed to channelize long-term financial savings.

Budget 2015 Change tax laws to make pensions annuities plans attractive

Savings for old age. Flickr/Kentee Gardin

One of the important customer needs which drives savings behaviour is planning for retirement. This becomes even more important in a country like India because of increasing life expectancy and inadequate social security measures.

The insurance industry plays a very important role through pension and annuity products. The current tax laws adversely discriminate against pensions and annuities and thereby create a disincentive for retirement planning through these products. We expect that this long standing anomaly will be corrected and this will help customers in saving effectively for their retirement needs.

Universal KYC and Single demat account

The finance minister in his maiden budget speech had announced the concept of universal KYC and a single demat account across asset classes. This is a powerful idea and if implemented well, will be a big ease to customers of financial products across BFSI sector. We look forward to further clarity and for this initiative to become operational.

Modify sum assured to premium ratio

Tax benefits in respect to life insurance policies are available only in cases where the sum assured to premium ratio is at least 10. While this provision was made with the intention to increase the cover provided by life insurance companies, it also ends up making the policies unattractive for middle and higher age groups given that there is an exponential rise in the cost of mortality in later years. We look forward to some relaxation in these guidelines either in form of tax benefits linked to the tenure of the policy or lower multiples for higher age customers.

(The author is MD & CEO, Edelweiss Tokio Life Insurance Company Limited)

Updated Date:

also read

Cryptos can lead to dollarisation of economy: RBI officials to par panel
Business

Cryptos can lead to dollarisation of economy: RBI officials to par panel

There are an estimated 15 million to 20 million crypto investors in India, with total crypto holdings of around USD 5.34 billion

7-year report card of three flagships from Modi government
Business

7-year report card of three flagships from Modi government

Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), and Atal Pension Yojana (APY) complete seven years of providing social security net to the beneficiaries on Monday 9 May, 2022

International Tea Day 2022: Here are some types of herbal tea and their benefits
World

International Tea Day 2022: Here are some types of herbal tea and their benefits

International Tea Day is marked on 21 May each year across the globe. Sometimes, tea does wonder in preventing some known and unknown health issues