2013 is when India’s insurance sector might look up again

The coming year 2013 will have a lot of hopes pinned on for a greater financial standing, in terms of various industries who havent really done well in the last financial year. One of them is the insurance sector, as the FDI bill for 49% investment by foreign companies is set to go on the floor of the house, and put to vote by the members of the house. Other than this, the government is also looking to extend tax breaks especially for the first premium paid by consumers, which shall be bought in to ensure a healthier insurance industry.

The tax break as spoken earlier, was intitiated by Finance Minister P Chidambaram, who is currently in talks with the tax authorities and also the IRDA (Insurance Regulation Development Authority) for the implications of the idea. Alongside there are numerous other methods being discussed, which he feels would be taken to incentivise the industry, currently undergoing a slowdown. The department of revenue is examining whether, in addition to the National 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 the premium paid. Besides, the department is looking into the proposal of exempting annuity policy from service tax in line with NPS and may reduce the levy on single premium products.

The key initiatives expected by the industry include bank assurance, open architecture, use and file product approval process and simplifying agency licensing process. During 2012, the Cabinet approved the much-delayed Insurance Bill, for approval and passage in Parliament so that foreign investors can pump in more funds into the capital-intensive sector.

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