Govt announces 12-point action plan for life insurance

Shishir Sinha Updated - October 01, 2012 at 03:09 PM.

Tax authorities to examine relief by Oct 10

The Finance Minister P. Chidambaram has announced a package for the life insurance sector. These measures are intended to benefit the companies as well as the policy holder. Here are the highlights:

General issues:

IRDA to consider ‘Use and File’ system for introduction of simple and easily understood products. Life insurance companies, subject to some conditions, can introduce a product even without getting formal approval from the IRDA.

IRDA to consider 30-day norm for clearance of products

IRDA will evolve, notify guidelines in order to reduce the arbitrage between ‘units’ and ‘traditional products’

Bank can become brokers for offering bouquet of life insurance products

All banking correspondents may be allowed to sell micro insurance products

An insurance company may appoint ‘mentors’ for mentoring agents

Relaxation in investment norms for life insurance companies is under consideration

The investment in infrastructure SPVs floated by any company and not just by PSEs will be allowed

Taxation Issues:

Reduction in service tax on first year regular premium as well as single-premium policies

Treating the annuity policy at par with NPS

Exempt premium for social security insurance schemes from service tax

New avenue for Income-Tax exemption. Department of Revenue to consider allowing some insurance pension products to be included in separate limit over and above Rs 1 lakh under Section 80(C) of the Income Tax Act

For agents, TDS on cumulative commission payment exceeding certain threshold, say Rs 50,000

Shishir.Sinha@thehindu.co.in

Published on October 1, 2012 08:06