Changes in Life Insurance Policies: Two government officials have stated that the Indian government is unlikely to alter its budget proposal to tax the total returns on high-value life insurance policies. This comes amid requests from insurance companies to reconsider the move. The tax exemption on total returns upon maturity of life insurance policies if their aggregate premium exceeded Rs 5,00,000 ($6,103), according to the government’s presentation of the 2023/24 budget on Feb 1, 2023. Read More Business News on our website.
Changes in the Life Insurance Policies, Everything is Here
Top executives from insurers have met with Finance Minister Nirmala Sitharaman and officials from the finance ministry to ask them to consider the thoughts again, which will take effect for policies issued on April 1, 2023.
The official added that the government will look into allowing these investments to be adjusted for inflation, also known as “indexation.” Adjusting the purchasing price by the income tax department’s cost inflation index (CII), which is published regularly, is known as indexation.
Another government official stated that the Prime Minister’s Office (PMO) will make the final decision and that the Department of Financial Services has suggested that the PMO approve these indexation benefits.
Emails and messages seeking clarification from Reuters were not returned by the Indian finance ministry. Because the budget has not yet been approved by parliament, the names of the three government officials were withheld. According to Kuldip Kumar, an independent tax consultant, indexation will lessen the policyholder’s tax burden if permitted.
According to Kumar, this benefit will reduce the tax rate from 30 percent to 20 percent, making insurance proceeds taxable as capital gains rather than “income from other sources.”
One of the officials, who requested anonymity, stated, “The government is not keen to revise the 500,000 rupees threshold limit because it only impacts high-net-worth individuals and not the common man.”
In the end, the question that ponders in both conscious and unconscious states is whether these pledges are ever going to be filled or are just a vague path with false pledges and expedients for the countrymen. Also, read more updates on Industrial Front.