In pre-budget suggestions by various industry experts, the insurance industry also recommended and raised some expectations from the Union Budget 2022. The insurance industry is expecting a bunch of measures in the budget to boost their business, administration, tax, and various other things. From a separate limit for deduction of life insurance policy premiums to their taxation reforms. Here's what insurance industry expects from the Union Budget:
Life insurance premiums should be deducted separately
Life insurance policyholders have high hopes for the impending Budget 2022, particularly in terms of collecting tax advantages for premiums paid on life insurance plans. According to insurance industry analysts, Budget 2022 could pave the way for the establishment of a new provision of the Income Tax Act that allows taxpayers to claim a deduction for premiums paid in a given year. For tax reasons, life insurance premiums and a variety of other investment alternatives are now lumped together under Section 80C.
Consider a life insurance coverage to be a valuable investment
In the forthcoming Budget, the Institute of Chartered Accountants of India (ICAI) has made many proposals regarding life insurance contracts. The institude has suggested that Life Insurance Policies (LIP) should be treated as a capital asset under the definition of "property" under section 2(14) of the Income Tax Act. Furthermore, the institute went on to say that the present section 10(10D) exemption is based on the premium to the real capital amount insured ratio. As a result of the taxable treatment of diabetes, blood pressure, and other occupational/lifestyle disorders, life insurance plans with higher premiums are available.
Increasing the TDS threshold for insurance commissions (section 194D)
The industry has several expectations, this particular expectation is for the better work of the industry. The industry expects that the TDS threshold for insurance commissions under section 194D of the Act should be increased from Rs 15,000 to Rs 100,000. The reason behind this increase is nothing but to make the administration work efficiently. The threshold from Rs 15,000 will lessen the tax department's administrative cost in processing refunds while also increasing the agents' discretionary income.
Separate Deduction for different insurance such as Home, Travel, and Personal
Making their suggestions strong, the ICAI also advised that policyholders should be allowed to make a separate deduction for costs Making their suggestions strong, the ICAI also advised that policyholders should be allowed to make a separate deduction for costs relating to travel, personal, or house insurance. Life Insurance Policy premiums are currently eligible for a deduction under section 80C of the Act, whereas health insurance premiums are eligible for a deduction under section 80D. A separate deduction for payments related to travel insurance, house insurance, and personal accident insurance policies might be made accessible to policyholders.relating to travel, personal, or house insurance. LIP premiums are currently eligible for a deduction under section 80C of the Act, whereas health insurance premiums are eligible for a deduction under section 80D. A separate deduction for payments related to travel insurance, house insurance, and personal accident insurance policies might be made accessible to policyholders.
Taxability of foreign reinsurers' reinsurance premiums
Taxation is a difficult concept to grasp. Working on it, the industry has suggested that clarification on the taxes structure for foreign reinsurers doing business in India through their branch offices be provided. Furthermore, clarity on the taxability of reinsurance premiums generated by a foreign re-insurer with no taxable presence in India is essential. This will clear up any doubts about the taxability of reinsurance premiums and boost the reinsurance industry in the country.