IRDA: Govt should drop tax on insurance maturity proceeds

 

 

 

Insurance regulator Irda will take up with the government the issue of 2 per cent income tax deducted at source (TDS) by life insurers from maturity proceeds, a senior official said.

The tax has been imposed on life insurance products only, and hence Irda has favoured its removal to bring parity of such plans with other financial instruments.

“Out of various gross domestic saving (GDS), which comprises financial instruments like MF and insurance, it is the life insurance products only which are taxed on maturity. This was not justified keeping in view the fact that insurance is a ‘pull’ product,” Irda Member (life insurance) Nilesh Sathe said.

The watchdog will take up the issue with the government and push for removal of the tax, he told reporters on the sidelines of CII Financial Distribution summit. Moreover, Sathe said, the 21 lakh agents working for the insurance sector need to be incentivised through commission.