Regarding the changes in the life insurance sector, Union finance minister P. Chidambaram on Monday said: “The department of revenue will examine whether, in addition to new pension scheme (NPS), some insurance pension products as approved by IRDA may be included in the separate limit over and above the limit of Rs 1 lakh under Section 80C of the IT Act for the purpose of income tax deduction on premium paid.”
CBDT would consider whether the total sum paid for post-retirement medical scheme could be made eligible for income tax deductions. “At present, service tax is levied on premium on accrual basis. The CBEC will be requested to examine whether service tax may be assessed on realisation basis,” he said.
On the decision IRDA has agreed to take, he said the insurance regulator will accept the know your customer (KYC) check done by the banks while a person opens an account. Only additional information that is required for the purpose of insurance policy will be sought from the intended policy-holder. This will bring down the “onboarding cost”.
IRDA will consider notifying banks as “brokers” which will allow them to sell the products of more than one insurance company. This will provide the intended policy-holder a bouquet of products from which the subscriber may chose the appropriate product based on his or her needs and will also prevent mis-selling. “At present, investments are permitted in an infrastructure SPV floated by a public sector enterprise (PSE) subject to the condition that the parent company (PSE) meets the rating criteria. In order to encourage investments in infrastructure, IRDA will allow investments in an infrastructure SPV floated by any company where the SPV is a wholly-owned subsidiary (WOS) of the parent company and the debt instrument issued by the SPV is guaranteed by the parent company, having due regard to rating criteria,” said Mr Chidambaram.