Income Tax Rule 2023: New tax system increased the tension of insurance, mutual funds – in new tax regime raised concerns over investment in insurance, mutual funds
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Rakesh Goyal, managing director of Probus insurance broker, said the insurance business was expecting that the finance minister would include some gifts in this year’s budget. In the days preceding the presentation of the budget, there was widespread speculation that section 80C of the Income Tax Act would be amended, and the existing deduction for health insurance premium would be expanded. Goyal said that on the other hand, the budget has proposed that only income from policies (other than ULIPs) with aggregate premium up to Rs 5 lakh will be exempt from taxation.
In general, I believe it will have a detrimental effect on the insurance business, Goyal said. Moreover, individuals who come under the new tax regime and have an annual income of up to Rs 7 lakh will not be required to pay any tax. This will have a negative impact on the insurance industry. I am hopeful that in the coming years, we will move in that direction, which will bring us to a position where we will not be eligible for any tax benefits, such as deduction under 80C and health insurance.
Mayank Goyal, Founder and CEO, MoneyHOP, said that the new tax regime also has the potential to pump more disposable income back to the end consumer, which in turn will encourage B2C new-age businesses to spur individual economic activities such as consumption, tourism, lifestyle upgradation, etc. would be a welcome step for
Chartered Accountant Ved Jain on Wednesday said that the Union Budget presented by Finance Minister Nirmala Sitharaman cannot be good from the point of view of the society as a whole. Since the election is round the corner, the government thought how to give relief to the middle class tax payers, this could be one of the reasons, otherwise tax collection and inflation is also a factor that needs to be taken into account.
But I believe this tax exemption will not be helpful to the taxpayers, Jain said in a conversation with IANS. A taxpayer must take care of his future status, retirement, social security, medical. When a person invests in PF, insurance, it is all there for him. Create a social security for their future. Now they say that you should pay less tax without adopting these social security measures, might not be good for the future of the overall society. He said that just think what will happen after fifteen-sixteen years, when the person will become old, and he will not have any source of income, where will the money come from.
Life insurance stocks witnessed a massive selloff after the Union Budget pushed forward a new tax regime and cut tax benefits on high-value insurance policies. On the BSE, LIC was down over 8 per cent, HDFC Life was down over 10 per cent, Max Financial was down over 9 per cent, SBI Life Insurance was down over 9 per cent, while ICICI Prudential Life Insurance was down over 10 per cent .
Vinod Nair, Head of Research, Geojit Financial Services, said the push for a new tax regime in the Budget has led to heavy selling by life insurers, making insurance products less attractive as a tax-saving instrument. Experts say that the new tax regime (NTR) will now be considered the default regime, but it may not necessarily be a better regime for all taxpayers.
Preeti Sharma, Partner – Tax & Regulatory Services, BDO India, said that the Finance Minister has made a conscious effort to make the New Tax Regime (NTR) more attractive to taxpayers. He said, NTR will now be considered a default regime for all taxpayers, but it does not mean a better regime for all. Taxpayers still need to look at their individual status, various investments and expenses that are eligible for tax exemption under the old regime. And then decide which regime is better for them. Preeti Sharma said that though NTR is the default regime, a person still has the option of opting for the old regime, if it is more beneficial in terms of tax outflow.
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