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Interview of Mr. Stuart Purdy,
Managing Director, Aviva Life Insurance
(Date: 2nd March 2006)
Union Budget 2006-'07
Reactions from Mr. Stuart Purdy
Budget announcements:
Section 80C
· Overall limit of Rs. 1 lakh remains
· Fixed Deposits with scheduled banks with a term
of 5 years and more will now be included in Sec 80C
· Cap on Pension of Rs 10,000 under section 80CCC
has been abolished. Hence customers can now invest the entire
1 lakh in a pension scheme
Fringe Benefit Tax
·Investment upto Rs 1 lakh per annum in Group Superannuation
schemes by employers for each employee is now tax-exempt
Comprehensive Insurance Bill to be presented this year.
Reactions:
Section 80C:
This is a favourable move to encourage long-term savings.
Now customers have the flexibility to invest upto Rs 1 lakh
in pension plans for future financial security. The overall
limit under Section 80 C however should have been raised
to at least Rs. 2 lakhs.
Fringe Benefit Tax:
We welcome this announcement. In view of lack of social
security mechanism, contribution by the employers towards
superannuation funds is very important and this move will
help protect the future of employees. After the FBT was
levied on superannuation schemes last year, many organizations
have not offered this benefit to employees. We hope this
will change this year.
Insurance Bill:
The Finance Minister has announced that a comprehensive
Insurance Bill will be presented this year. Even though
the Government has not announced an increase in FDI to 49%
as was promised in the last two budgets, we welcome this
announcement and appreciate that the Government is giving
due importance to the insurance sector. In India, in view
of lack of social security mechanism, life insurance policies
and pension plans provide a future security for a number
of people.
We eagerly await the Bill and hope that it would cover the
following important issues affecting the growth of the insurance
sector in India:
Increase Foreign Direct Investment to 49%
Maturity proceeds to remain tax-free. EET system of taxation
should not be introduced.
We hope that the Government creates the right opportunity
for the growth of this industry and help make insurance
a source for infrastructure development in the country.
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