BudgetSpeak #2: Sanjay Tripathy: Long-term financial planning needs impetus

24 Jun,2014

By Sanjay Tripathy

 

In the absence of a formal social security framework there is a need to provide tax incentives for growth of disciplined savings behaviour. I believe Life Insurance plays a critical role in using small savings for capital formation. To encourage savings for the growth of economy, the present limit for deduction under section 80C of the Income Tax Act needs to be increased for life insurance premium or there should be a separate limit for such long-term financial products.

 

Service tax exerts adverse pressure on insurance companies to offer plans at a more affordable rate. Revision of these rates and exemption of the tax on preventive health check-ups will be a welcome move from the Government. Further, to give impetus to long-term financial planning, Annuity and NPS payouts should be brought under EEE regime. An important step to help the Indian insurance industry would be to increase the investment flow through higher FDI limit (from 26% to 49%). This move by the government can be a game-changer for the financial sector and also help in improving the economic sentiment of the nation.

 

Sanjay Tripathy is Senior Executive Vice President – Head Marketing, Products & Direct Channels at HDFC Life

 

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