INSURERS SEEK ‘DEFINED’ TAX SOPS ON LIFE

Private life insurers are seeking a separate tax exemption limit of Rs 1 lakh for long-term investments in insurance and pension schemes, in the 2008-09 Union Budget. At present, under Section 80C of the Income Tax Act, both long- and short-term investments are exempted from tax up to Rs 1 lakh. In its pre-budget memorandum, the Life Insurance Council of India-the industry body of life insurers-said the absence of any proper definition of long-term investment has encouraged investment in short-term products. The Union Budget for 2008-09 (Apr-Mar) will be presented in Parliament on February 29. “To encourage long-term savings, we request a separate limit of Rs 1 lakh for long-term investments such as life insurance under Section 80C. The definition of ‘long-term investment’ could be any investment with an investment horizon of at least 10 years,” the pre-budget memorandum said. The life insurance body has demanded standalone deduction of Rs 1 lakh for contribution to the pension plan of the life insurer under section 80CCC. Expecting more time for break even, private life insurers have sought an increase in the carry forward period to 12 years to set off losses. Under Section 73, no business loss shall be carried forward for more than 8 assessment years, immediately succeeding the assessment year in which the loss was first computed. Life insurance players see Companies that started operations in 2000-01 taking another four-five years to break even. – www.financialexpress.com