No radical changes are expected in the Union Budget 2011, as the Direct Tax Code is on its way in 2012.
Life insurance industry is expecting separate limit of Rs 50,000/- for the life insurance premium, apart from the deduction u/s 80C of Rs 100,000 and Rs 20,000/- for infrastructure bonds.
Availability of separate tax exemption for life Insurance premium will boost the Life insurance industry, as the tax payers will look at it as a tax savings device. This will ensure better insurance penetration in the country.
Currently, the total tax savings such as PPF, Life insurance premiums, PF contributions, National Savings Certificates etc are covered under Rs 100,000 limit u/s 80C of the Income tax Act.
'EEE' regime will continue atleast upto the new Direct Tax Code.
Life insurance industry is expecting some clarity about the applicability of Minimum Alternate Tax (MAT) for the life insurance companies.
The time limit of 8 years is available for carry forward of tax losses, the same should be relaxed for life insurance companies, since this industry has a very long gestation period of 8 to 10 years.
Threshold limits for tax audit which is currently Rs 60 lakh (Rs 6 million) and Rs 15 lakh (Rs 1.5 million) is expected to be raised upto Rs 1 crore (Rs 10 million) and Rs 25 lakh (Rs 2.5 million) for businesses and professionals respectively.
The corporate tax rates are expected to remain the same. Surcharge on the corporate tax is expected to be removed.
The individual tax brackets expected to be increased..
|
Particulars |
Existing Tax Rates |
Particulars |
Proposed Tax Rates |
|
Income upto Rs. 1,60,000 |
NIL |
Income upto Rs. 2,00,000 |
NIL |
|
Income Above Rs. 1,60,000 upto Rs. 5,00,000 |
10% |
Income Above Rs. 2,00,000 upto Rs. 5,00,000 |
10% |
|
Income Above Rs. 5,00,000 upto Rs. 8,00,000 |
20% |
Income Above Rs. 5,00,000 upto Rs. 10,00,000 |
20% |
|
Income Above Rs. 8,00,000 |
30% |
Income Above Rs. 10,00,000 |
30% |
In case of Service tax, Life insurance industry expects that the rebate on claims will be allowed against the risk premium service tax.
