1) Separate Block for long term savings Currently the aggregate deduction of Rs one lac includes long term and short term savings. The availability of short term tax saving instruments discourages people from investing money into long term investments like life insurance and pensions. People avoid locking money for longer durations and the fact that long term savings get more impacted by inflation, actually compounds the problem. Therefore there is urgent need to have a separate block for savings of long term nature, like Life Insurance, Pensions with minimum lock in of 5 years. 2) Life Insurance companies be allowed to carry forward losses by another two years, from current 8 years to 10 years Extend tax benefit to Life Insurance companies by another two years It is also universally recognized that life insurance industry has a long gestation period and it takes minimum 8 to 10 years to break even. Hence the period of 8 years for carry forward of losses is not enough. There is dire need to relax the provision of carry forward of losses on one time basis at least in the first 10 years of the operations of the life company. 3) Bring Parity in the Service Tax levy on ULIPs, in line with MF products There is a disparity in the levy of service tax on ULIPs and MFs. While MFs pay Service Tax only on Fund Management charges, insurance companies are subjected to Service Tax on policy administration charges, Premium Allocation charges, Mortality charges. What is more ironical is that service tax is also payable on Stamp duty levied on insurance policies and paid to Government which is recovered from the policy holders.
Mr.S.B.Mathur - Secretary General, Life Insurance Council
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