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The Finance Minister Nirmala Sitharaman has announced in the Union Budget 2023 of increase in tax on insurance premiums. But she also assured the people of the intention to encourage instead discourage investment in Insurance. Also, many sec
tors will be changing the new tax system because there is an old one.
The Finance Minister also stated on Budget 2023 in a press conference after talks with the Industry Experts on Saturday that they don’t intend to discourage investment in Insurance and other sectors with the New Tax System. They consider it an old system. They also shunned the criticism after the budget announcements on Increasing Tax on Insurance premiums by calling them baseless.
FM emphasized more Insurance Purchase
The Finance Minister shared a concern that a large part of the country is not insured, and the Centre seeks to cover more and more people from life and other risks. The Centre pressed that it does not discourage the people with its new tax regime from purchasing policies. However, people must treat Insurance as an investment. Some people invest in Insurance to save on taxes. The PM Jeevan Yojana tries to increase the Insurance penetration to every nook and corner of the country. The argument placed is that if people can pay for the Long Term Capital Gains tax on gold as well as real estate, why must they not invest in insurance premiums?
New Tax Rules on Insurance Premiums
In Budget 2023, the Union announced that the insurance income would become taxable. If the annual premium is more than five lakhs, then the Government will tax the income from it. Earlier, the regular income from Insurance was tax-free. And High Net Worth Individuals of the HNIs benefitted from this.
But after the union budget announcement, the HNIs will get limited benefits on the Insurance Income. The amended rule will be applicable from April 1, 2023. For instance, if you deposit more than five lakh rupees as a premium in the current fiscal year, then the insurance income yielded from it will be taxed as per the new regime, which will not include the ULIP plans, in contrast to the older regime. However, such a rule is not applicable to the insurance policy issued before or on March 31, 2023.
Growth and Recovery as per Union Budget 2023
The Finance Minister asserted the intention of the Centre that the formulated budget is focused on growth and recovery. The Union Government wants to maintain recovery as well as growth for the country’s economy, keeping in mind the fiscal consolidation in the rendered budget. The Centre must keep it up for persistent growth.
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If you wish to know about the Adani-Hindenburg Saga, which the Finance Minister refrained from speaking about, then you can write to us, and we will bring you the required facts in the crispest and most content form. On the decision taken on the repo rate, the FM informed that for the RBI’s Monetary Policy Committee, the Apex Bank could better detail the rate hike on the policy.
Also Read: Union Budget 2023: What's there for the Entrepreneurs, Farmers, and Middle Classes?
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
