Budget 2025 | A ‘Kabi Khushi, Kabi Gum’ program for insurance sector – CNBC TV18

Budget 2025 | A ‘Kabi Khushi, Kabi Gum’ program for insurance sector – CNBC TV18



The budget of Finance Minister Nirmala Sitarman proposes to increase the range of 100% in foreign direct investment (FDI) range in the insurance sector from the current 74%. But it comes with some riders.

Idardi President Debasish Panda told CNBC-TV18 that this is a suitable time to increase the FDI limit in the insurance sector.

Last time the FDI limit in insurance increased from 49% to 74%, it hardly succeeded in bringing foreign capital. However, the President of IRDAI is confident that allowing 100% FDI will be able to plan foreign insurers and investors independently of their business on the basis of domestic partners.

They believe that this high FDI limit will help largely bring a lot of capital, capacity and expertise to the Indian insurance sector, which will create an ecosystem that can better complete for India’s population. Which is still not unpainted or low to a large extent.

Although the announcement of the Finance Minister’s income of 12 lakhs, smiles for many people to make tax-free, life insurers appear to be worried as they may be on the losing. The concern is that if more people move to new tax governance, it can reduce the encouragement to buy life or health insurance for tax savings. This is because the new governance does not offer exemption under Section 80C or 80D. Estimates suggest that 5-7% individual new business premium of life insurance industry comes from 80C tax benefits.

Read: Why HDFC Life CEO is not worried about high insurance FDI

However, MD & CEO of HDFC Life, Vibha Padalkar clarified that only 2% of the insurer’s individual new business premium is connected to 80C. The announcement initially pulled the Life Insurance Shares down by 5-6%, although they corrected most of the damage by the end of the trading session.

Additionally, the government has provided clarity on Unit Linked Insurance Policy (ULIP) taxation. Currently, ULIP returns are taxed. If the annual premium exceeds ₹ 2.5 lakh, the person’s income is often leading to high tax rates, with taxation based on slabs. The government has now made it clear that these ULIP policies will be taxed at 12.5%instead under capital gains, which is less than taxation based on a person’s income slab.

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