Active Stocks
Fri May 24 2024 15:59:27
  1. Tata Steel share price
  2. 174.80 -0.37%
  1. NTPC share price
  2. 374.85 0.68%
  1. State Bank Of India share price
  2. 828.60 -0.45%
  1. ITC share price
  2. 436.10 -1.16%
  1. Power Grid Corporation Of India share price
  2. 318.50 -0.39%
Business News/ Money / Personal Finance/  Budget 2024 expectations: Extending tax exemption for pension and annuity plans
BackBack

Budget 2024 expectations: Extending tax exemption for pension and annuity plans

Experts recommend introducing a separate tax deduction limit for life insurance and changing tax sections 80C and 80D to provide separate tax breaks for life and health insurance payments, as well as fixed-term insurance plans, to enhance social security

Investing in pension and annuity products is crucial for income after retirement. (iStock)Premium
Investing in pension and annuity products is crucial for income after retirement. (iStock)

Finance Minister Nirmala Sitharaman will present Narendra Modi's govt Interim Budget 2024 on 1 February 2024. Making taxes simpler or removing them for pension and annuity products will encourage more people to invest in these important financial protections, believe experts. Investing in pension and annuity products is crucial for income after retirement. 

Changes for pension and annuity plans

“It is proposed to the government to consider extending the application of the current 50,000 tax exemption for the National Pension Scheme under Section 80CCD(1B) to pension and annuity plans of insurance companies that will provide a more level playing field for such similar products and encourage increased investments," said Prashant Tripathy, MD & CEO, Max Life Insurance. 

Alongside, it is suggested to consider zero rating of pension and annuity plans, i.e., setting a GST rate of 0% for the said plans, which will also help lessen the tax load for people receiving pensions and thus enhance financial security for more citizens, added Prashant Tripathy.

Satishwar B, MD & CEO, of Aegon Life Insurance, also thinks that the current 50,000 tax exemption for NPS under Section 80CCD(1B) should also apply to pension and annuity plans to encourage more people to use them.

Separate deduction for Term Life Insurance under Old and New Tax regime

“We propose to the government to consider introducing a separate tax deduction limit for term life insurance under the old tax regime, as the current Section 80C also covers other tax-saving products like PPF, Sukanya Samriddhi Scheme, ELSS, etc. Additionally, there should also be an allowance of deduction for term life insurance under the new tax regime. This will make life insurance more financially appealing and also motivate taxpayers to practice responsible financial behaviors and ensure that families stay financially secure in uncertain times," said Prashant Tripathy.

“We have been asking the government to introduce a separate tax deduction limit for life insurance for the last 5 to 6 years but nothing has happened. The reason is that the current Section 80 C is too cluttered where a person can claim deductions up to 1.5 lakh for PPF, Sukanya Samriddhi Scheme, ELSS, tax saving fixed deposits, school fees, principal sum of a home loan, including life insurance," said Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance

India faces a severe issue with inadequate insurance. “Changing tax sections 80C and 80D to provide separate tax breaks for the life-threatening risk part of life and health insurance payments, as well as for fixed-term insurance plans, could help close the gap in death risk coverage and enhance social security," said Satishwar B, MD & CEO, Aegon Life Insurance.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

 

 

 

 

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

ABOUT THE AUTHOR
Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 22 Jan 2024, 02:28 PM IST
Next Story footLogo
Recommended For You