Insurers seek separate tax exemption limit for policies

Life insurance companies have recommended a standalone additional exemption of Rs 50,000 for life insurance premiums under the Income Tax Act. They also sought the Exempt, Exempt, Exempt (EEE) bracket for life insurance policies

New Delhi: The insurance industry wants the government to create a separate tax exemption limit of Rs50,000 for life insurance premium in the forthcoming budget to encourage more individuals to buy such policies, reports PTI.

"It is suggested that a standalone additional exemption limit of Rs50,000 (over and above the already existing limit of Rs1,00,000) be specified for (life) insurance premiums alone under the Income Tax Act," Canara HSBC OBC Life Insurance chief financial officer Anuj Mathur said.

Currently investment in saving instruments, like risk cover, pension products, PF contributions, National Savings Certificates and others, are eligible for aggregate deduction of Rs1 lakh.

Besides, investments in infrastructure bonds up to Rs20,000 also qualify for deduction.

"We recommend a separate limit for tax exemption for long-term saving instruments like life insurance or increasing the limits on life and health insurance premium could be looked at," Max New York Life Insurance MD & CEO Rajesh Sud said.

Industry experts said changing lifestyle made necessary an assurance for future income generation, thereby increasing the need for a life insurance policy.

Mr Mathur said in order to ensure better insurance penetration, life insurance companies should be allowed to come under the Exempt, Exempt, Exempt (EEE) bracket.

Under EEE, a policy holder gets tax exemption at various stages during the term of the policy.

The insurance sector needs capital on a periodic basis for expansion and experts hope that the budget session would also see passage of FDI bill in insurance sector to 49%, from the current 26%.

"There is a need for more proactive regulatory architecture for insurance. Foreign insurers could be allowed to set up under a wholly-owned subsidiary with 100% FDI. The life insurance industry is very capital intensive and companies need huge capital to fund growth," KPMG executive director Naresh Makhijani said.

Life insurance companies currently pay tax of 12.5% and the Direct Taxes Code, which would replace the archaic I-T Act from 1 April 2012, does not specify any specific limit for the same. This would mean being taxed at 30%.

"A significant portion of funds of life insurance companies are invested in infrastructure projects. Also companies incur huge losses initially due to long gestation period. With higher tax rates, it will be unattractive proposal for new investors to invest in the sector," Max New York Life's Mr Sud said.

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State-owned oil retailers hike jet fuel prices by over 4%

The ATF price hike, the second biggest increase in a year, comes on the back of another 4.5% jump in rates effected from 1st February. This is the ninth straight increase in jet fuel prices since October 2010, when international crude oil prices started soaring

New Delhi: State-run oil marketing companies on Tuesday raised aviation turbine fuel (ATF) prices by a massive 4%, the ninth straight increase in rates since October, reports PTI.

ATF rates in Delhi have been hiked by Rs2,104 a kilolitre, or 4.12%, to Rs53,538 a kilolitre (kl) with effect from midnight of 15th February, an official of Indian Oil Corporation, the nation's largest fuel retailer, said.

The hike, the second biggest increase in a year, comes on the back of another 4.5% jump in rates effected from 1st February. "The hike has been necessitated because of spurt in international oil rates," the official said.

This is the ninth straight increase in jet fuel prices since October 2010, when international crude oil prices started soaring.

The ATF price in Delhi in 1st October was Rs40,728.52 a kl. The rates were increased by Rs12,334.48 a kl or 30.28% in nine tranches since then, in tandem with surge in global oil prices.

Jet fuel will cost Rs53,538 a kl in Mumbai, home to the nation's busiest airport, from tomorrow, as against Rs51,332.82 a kl currently.

No comment could be immediately obtained from airline companies on the impact of the latest price hike on passenger fares. Fuel cost accounts for 40% of the airlines' operating cost.

Indian Oil Corporation and sister public sector retailers Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

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Tata Steel MD: India unlikely to achieve ambitious 2012 steel production target

As demand for steel grows in India, the steel ministry had set a target of 120 million tonnes per annum, by end 2012; Tata Steel more than doubles Q3 profit

India is not likely to achieve its ambitious plans to produce 120 million tonne per annum (mtpa) of steel by the end of 2012, a top Tata Steel official has said.

"I don't think we will produce 120mtpa by the end of 2012, from the current production capacity of 67mtpa, as we are still a net importer," Hemant Nerurkar, managing director, Tata Steel, told Moneylife on Tuesday.

The Indian steel ministry aims to produce 120mtpa by the end of 2012, to become the second largest steel producer in the world. According to the World Steel Association, the country is today the world's fifth largest steel producer.

Yesterday, Tata Steel, the world's seventh largest steel producer, reported an impressive growth of 112% in consolidated net profit for the third quarter ended December, on the back of growing demand and high product prices. The company (including its European unit Corus) recorded a net profit of Rs1,003 crore in the quarter from the Rs473 crore in the previous corresponding period.

The company's consolidated net sales grew by around 10% to Rs28,606 crore, over the Rs26,067 crore last year. The company's Indian operations did better than the European operations in the third quarter. The Indian operations reported sales of Rs7,397 crore, up 16% from a year earlier, while the European unit's sales stood Rs17,940 crore, up 7% from a year earlier.

The Tata Steel stock price gained nearly 4.5% to Rs644.15 on the Bombay Stock Exchange today, compared with the benchmark Sensex which stayed more or less flat.

"India's demand for steel is expected to grow by 10%-12% this year as demand from the auto sector is surging. We aim to provide one million tonnes of auto products for the auto industry," Mr Nerurkar said. "We are on track to achieve our volume target of 6.4 million tonnes for this financial year."

About steel prices, the Tata Steel managing director said, "Prices will be determined by international trends and we will be in a position to pass on the price hikes to our customers."

In 2011-2012, Tata Steel will focus on debottlenecking its India operations to meet the growing demand. "To maintain our market share we will focus on debottlenecking our Indian operations until the expansion programme at the Jamshedpur plant is completed," Mr Nerurkar said.

The Jamshedpur programme is expected to be completed by December 2012. Last month, Tata Steel raised Rs3,477 crore through a follow-on public offer. The company intends to spend Rs1,875 crore for the Jamshedpur expansion programme and Rs1,090 crore will be used to pay the redemption of some maturing redeemable non-convertible debentures.

The company has started ground work for its 6 million tonnes capacity Orissa project and it is looking for mines which will provide iron ore for at least for 30 years.

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COMMENTS

Shadi Katyal

6 years ago

I doubt if India can ever reach these goals and must remain dependent on the world because our new CZAR Mr. Ramesh will see to it that no industry which might have some implications of environment will not be allowed.We seen his decision on mines and other projects.
Here is a nation which Nehru called such plants as new temples though he also denied TATA to increase the capacity as he went for Russian modle where PSU were important.
Unless we take the Permit Raj road blocks away and let the industry develop on its own without hands tied,India can never reach thos3e goals.
Does our minister rectognise the need of the nation?

REPLY

Ravindra Shetye

In Reply to Shadi Katyal 6 years ago

Mr. Jawaharlal Nehru built the Temples.

Mr Jairam Ramesh is demolishing the temples.

MOEF is going overboard. I am sure when the Adivasi Children grow up, they will blame the Government that they have been kept backward. The same way for the Scheduled Castes in India.

shadi katyal

In Reply to Ravindra Shetye 6 years ago

I fully agree with you but our problems are manyfold as we have bleeding hearts who are misleading the poor people to keep a hold on them.
It is not only Czar Raamesh but some NGO and groups like Narbada andolan who rather keep their leadership and fight in name of Adivasis but keep them poor. I for one have failed to understand how stopping progress and inability to provide jobs and eduction will bring India at par with any development nation
We also forget that our population is multiplying and are we going to be 21st century labour provider to rest of the world since we are being forced to not develop the nation.
While there is a dark cloud hanging over the continent due to diesel burning of generators and cow dung as fuel, we are not allowing to openh coal mines to supply power to the people.
What kind of convulated thinking we have or do we wish to keep poverty for ever.

Ravindra Shetye

6 years ago

With everyone, mainly MOEF creating hurdles in the way of development of all sorts including the Beutiful cities like Lavasa, Steel Plant like POSCO, new airport for the Growth of Mumbai and so many other bright examples what else is to be expected?

Possibly back to the Stone Age?

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