Budget 2024: Insurers suggests Introduction of Separate Tax Deduction Limit for Life Insurance, Waiver of Taxation on Annuity and Pension Products

Insurers have suggested introduction of a separate tax deduction limit for life insurance, waiver of taxation on annuity and pension products in the upcoming Union Budget
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The life insurers want the government to introduce a separate tax deduction limit exclusively for life insurance premiums paid, bring life insurance annuity and pension products at par with the National Pension Scheme ( NPS ) and reduce the Goods and Service Tax rates on insurance products or provide GST exemption on them.

The life insurers have been constantly asking the Government to introduce a separate tax deduction limit for life insurance for the last 5 to 6 years. The reason is that the current Section 80 C of the Income Tax Act is too cluttered where a person can claim deductions up to Rs 1.5 lakh for Public Provident Fund ( PPF ), Sukanya Samriddhi Scheme, ELSS, tax saving fixed deposits, school fees, principal sum of a home loan, including life insurance.

Investing in pension and annuity products is crucial for income after retirement. Making taxes simpler or removing them for these products will encourage more people to invest in these important financial protections. The current Rs 50,000 tax exemption for NPS under Section 80CCD (1B) of the Income Tax Act should also apply to pension and annuity plans. Permitting individuals to deduct the entire amount paid for life insurance premiums from their taxable income, as stated in Section 56, without any decrease due to claims made under other sections such as 80C, will encourage more people to buy insurance.

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