Union Finance Minister Arun Jaitley Saturday gave a big fillip to the insurance, pension sectors by proposing to net large masses of people under the proposed insurance and pension schemes.
Presenting the budget for 2015-16, Jaitley said: "Encouraged by the success of the Pradhan Mantri Jan Dhan Yojana, I propose to work towards creating a universal social security system for all Indians, specially the poor and the under-privileged."
He said the proposed Pradhan Mantri Suraksha Bima Yojna would cover risk of accidental death for a value of Rs.200,000 for a premium of Rs.12 per annum.
Jaitley also said the government would also launch a pension scheme - Atal Pension Yojana- which will provide a defined pension, depending on the contribution, and its period.
"To encourage people to join this scheme, the government will contribute 50 percent of the beneficiaries' premium limited to Rs.1,000 each year, for five years, in the new accounts opened before Dec 31, 2015," he said.
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The other social security scheme outlined by him was the Pradhan Mantri Jeevan Jyoti Bima Yojana which covers both natural and accidental death risk of Rs.200,000 for an annual premium of Rs.330 for the age group 18-50.
Jaitley also proposed to use the unclaimed deposits of around Rs.3,000 crore in Public Provident Fund (PPF) and around Rs.6,000 crore in Employees Provident Fund (EPF) corpus to create a Senior Citizen Welfare Fund.
He said the fund will be used to subsidise the premium of vulnerable groups such as old age pensioners, below-the-poverty line card holders, and small and marginal farmers.
The schemes apart, Jaitley gave the tax boost to the life and other insurers by proposing an additional deductions.
The limit on deduction on account of contribution to a pension fund and the New Pension Scheme is proposed to be increased by Rs.50,000 to Rs.150,000.
"To provide social safety net and the facility of pension to individuals, an additional deduction of Rs. 50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80CCD. This will enable India to become a pensioned society instead of a pensionless society," Jaitley said.
Commenting on this, a senior official in a private life insurance company told IANS that "life insurance pension policies provide the mechanism for saving for the retirement over the active earning period of one's life and this deduction would definitely help persons in the younger population to start saving early for their sunset years".
The tax exemption limit for health insurance has been increased from Rs.15,000 to Rs.25,000, while for senior citizens, health insurance premium will now be Rs.30,000, noted Ajit Banerjee, chief investment officer, Bharti Axa General Insurance.
"With regards to the negatives, the increase in service tax from 12.36 percent to 14 percent shall result in increase of premium to policy holders. This may further increase to 16 percent from April 16 to facilitate transition to GST (Goods and Services Tax)," he said.
