Finance Minister Nirmala Sitharaman (Nirmala sitharaman) Has made a big announcement about the insurance policy. He gave the Union Budget on 1 February (Union Budget 2023) In that said that if the premium of traditional insurance policy is more than Rs 5 lakh, then the amount received from the maturity of that policy will not be tax-free. The purpose of this proposal is to limit tax exhalation on the amount received from the insurance policy of more amount. This announcement will affect the sale of insurance companies.
New rules will be applicable to policy issued from April 1
The proposal of the Finance Minister states that if the total premium of the Life Insurance Policy is more than Rs 5 lakh except ULIP, then tax exhalation will not be available on the income from the policy. This rule will be applicable to the insurance policy issued on or after April 1, 2023. The Finance Minister has said that this rule will not affect the policy issued till March 31, 2023.
ULIP rules have changed in 2021 only
Clear CEO Archit Gupta said, “You may have one or several insurance policys, which can be more than Rs 5 lakh in a year. In such a situation the sum assured will come under the tax.” It is important to keep in mind that the tax exemption in case of ULIP was withdrawn in 2021 itself. It was then said that if the premium of the Ulip is more than Rs 2.5 lakh annually, there will be no tax examples on the income.
Insurance industry will affect
Experts say that this decision of the government will have a bad impact on the insurance industry. Kapil Mehta, co-founder of the Securenau Insurance Broker, said, “This step will not show interest in buying more value traditional policys. But, this will increase the focus of the people on the term plan and pure risk covers, which is a good thing.”
Mehta said that a concern is that this decision does not include the inclination of investors purely towards investment -based ULIPs. The insurance industry had high expectations from Union Budget 2023. The industry demanded separate baskets of tax deduction for life insurance policy. However, this demand has not been met.
Change in new tax regimen will also affect insurance industry
The government has made several big announcements to make the new reizard of income tax attractive. Since, there is no deduction on investments in tax savings instruments in this regimen, it is believed that there may be a decline in demand for insurance products in terms of tax saving. This is the reason that after the union budget was presented on 1 February, the shares of insurance companies saw a decline.
