Budget 2020: Life Insurance Council has proposed additional tax deductions of Rs 50,000 over and above the 80C limit on investments made in pension plans of life insurance companies.
Life Insurance Council is the face of the Life Insurance industry that connects the various stakeholders of the industry. It functions together with participation of all the Life Insurers through several sub-committees towards development of the industry. IT also leads the advocacy effort on the industry’s behalf before the Regulator (IRDAI), Govt. of India and all other statutory bodies through its consortium of 24 life insurance companies.
In its list of expectations from the Union Budget 2020 that the Life Insurance Council has shared with Finance Minister Nirmala Sitharaman, the Council has proposed additional tax deductions of Rs 50,000 over and above the 80C limit on investments made in pension plans of life insurance companies in the line of National Pension System (NPS).
“For a pension plan issued by life insurance companies, an individual contribution to the pension fund is deductible under section 80CCC under the overall limit of section 80CCE of INR 150,000.
The Finance Act 2015 inserted a new sub-section (1B) under Section 80CCD of the Income Tax Act to encourage investment in NPS by any individual by allowing an additional deduction of INR 50,000 over and above the INR 1.5 lakhs available under Section 80CCE of the Act.
It is recommended that in order to reduce gap between taxation of pension policies issued by Life Insurance Companies vis-à-vis NPS of the CG, the additional deduction of INR 50,000 for premium paid (as available for NPS) should be extended to pension policies issued by Life Insurance Companies,” said S N Bhattacharya, Secretary, Life Insurance Council.
Life insurance meets the twin needs of providing protection as well as long-term savings with the goal of meeting living needs. It is particularly needed in the absence of the Government’s social security scheme that is present in many global economies.
The Council wants the Finance Minister to consider a separate deduction to be provided for premium paid on individual life policies.
If no separate deduction is provided, the existing limit of INR 1,50,000 (i.e. section 80C) should be enhanced from INR 1,50,000 to INR 3,00,000, since the existing limit of INR 1,50,000 is too crowded with both short-term and long-term investment vying for its share.