With the union budget around the corner, the Indian Chambers of Commerce & Industry has issued recommendations from the insurance sector. They are:
• Rule 5(a) in the Income Tax act should be amended to provide to specify deduction of expenditure or allowance in future years on insurance pursuant to fulfilment of conditions laid down
• The limit of 8 years for carry forward and set off of business losses in the Insurance is not sufficient. It should be extended
• Enhanced deduction of life insurance premium from up to Rs 1,50,000 of Rs. 2,00,000 along with an overall enhancement in the investment limit to at least Rs. 3,00,000
• Premium paid for personal accident policy, home insurance and travel policy should be allowed as deduction to the policy holders
• Clarity be provided on taxability of reinsurance premium of foreign reinsurer has a branch office in India vis-a vis when they don’t have any presence in India, Also, clarity on non-applicability of withholding tax provisions with respect to payments made by Indian insurance companies to foreign reinsurers
• A mechanism should be laid down for claiming refund when policyholders to cancel the policy during the free look period (currently set to 15 days)
• The threshold limit for deduction of tax at source under section 194D of the Act may be increased to Rs. 100,000
• Section 194DA of the Act was introduced vide the Finance Act (No 2), 2014, for applying TDS on policyholders pay-out where amount exceeds Rs 1 lakh should be repealed as it is detrimental to the insurance business
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