Life insurers want tax relief for maturity proceeds to continue

Life insurers want tax relief for maturity proceeds to continue

Life insurance companies want the current system of tax exemption for insurance maturity proceeds to be continued. The proposed Direct Taxes Code has suggested deduction of tax on the final payout, while exempting the policy premium at the time of contribution and the interest on it.


The insurers have made a representation to the Government that the Exempt Exempt Exempt (EEE) method of computation should continue as against the Exempt Exempt tax (EET) method proposed in the Direct Taxes Code.
Insurance products are driven by tax benefits. The January-March quarter, which is the tax planning season, contributed 45-50 per cent of the total sales of the industry, said Mr Nageswara Rao, Chief Executive Officer, IDBI Fortis Life Insurance.
The domestic insurance industry is at a nascent stage and taxing the maturity proceeds as proposed by the Direct Taxes Code will adversely impact the life insurance business and the industry. It will discourage investors to invest in long-term savings as it may result in unjustified tax burden especially on those customers who do not avail themselves of the benefit under Section 80C, said Mr T.R. Ramachandran, Chief Executive Officer and Managing Director, Aviva Life Insurance.
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Life insurers want tax relief for maturity proceeds to continue