Also wants the EEE model to be applied to pure insurance products.
Life Insurance Council, the representative body for life insurance companies in India, will push for changes in the proposal to treat unit-linked insurance policies (Ulips) on exempt-exempt-tax (EET) basis under the direct tax code.
The second draft of the DTC proposes to treat all new Ulips on EET basis, while the pure insurance and annuity products on the exempt-exempt-exempt (EEE) basis.
“We are planning to meet Central Board of Direct Taxes (CBDT) officials next week to discuss the issue. Basically, we want that all insurance products should be treated at par,” said SB Mathur, chairman of the Life Insurance Council, on the sidelines of a function here on Wednesday.
Under EEE, products are not be taxed on maturity or withdrawal mid-way, but on EET such exemptions are not allowed.
Currently, for most private insurance companies ULIPs account for more than 70 per cent of their total portfolio. This apart, Mathur said, the council would suggest IRDA to make changes in the insurance regulator’s norm to bundle life covers with pension plans. “The new norm should be applicable to a lower age. Also other things, like health cover could be replaced with life cover,” said Mathur.
IRDA had set the deadline of July 1 for insurers to meet with the new rule for pension plans on a unit-linked platform.
For financial year 2009-10, the life insurance industry collected a total premium of Rs Rs 2,61,025 crore, a growth of 18 per cent over the last year. The industry had collected premium worth Rs 2,21,791 crore in the previous financial year.
Mathur said, in the present financial year, the total premium collection by the life insurance sector was expected to grow by another 18 per cent.
The new business premium for the last financial year stood at Rs 1,09,213 crore, against Rs 87,006 crore in 2008-09.
“In the last four years, more than Rs 1,55,600 crore of premium was collected at a commission of 1.75-2.0 per cent, which was lower than the prevailing entry load for mutual funds,” said Mathur.
