Insurance News Details

Insurance companies to be hit due to new tax regime: Says Chugh

(17-Feb-23   19:58)

According to Tarun Chugh, MD and CEO, Bajaj Allianz Life Insurance, the life insurance industry is likely to witness an impact of the government's proposal to tax income from high-ticket, non-linked life insurance products.

The insurance industry has sought a review of the Budget proposal on taxing the income from all non-ULIP products i.e. par and non-par, where aggregate insurance premium paid in a year exceeds Rs 5 lakh.

The life insurance industry is likely to witness a drop in sales of high-ticket non-participating products from April following tax-related Budget announcements. Leading private sector life insurers are expected to take a hit due to the new taxation.

In a meeting with finance minister Nirmala Sitharaman earlier this month, executives of insurance companies were understood to have sought a higher threshold of premium for levying tax. The main demand was to increase the threshold premium for taxation for non-ulip products from the proposed Rs 5 lakh to Rs 10 lakh.

“There will be an impact of all these measures that have currently been announced (in the Budget)…we are giving the representation to the governments (at industry levels). We don't know about the outcome. But in case it does not work, yes it is going to impact of course,” Chugh said on the sidelines of a Bajaj Allianz Life Insurance event in New Delhi on Thursday.

He was talking to the media after the company unveiled the second edition of its 'Life Goals Preparedness Survey 2023', which identifies the life goals and aspirations of Indians.

After the finance minister proposed taxing income from high-ticket non-linked life insurance policies, Chugh said introduction of the new tax is a bit of a 'dampener' for the insurance industry and for increasing penetration of insurance and household financial savings in India.

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