Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT RATES :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: TDS :: ACCOUNTING STANDARD :: VAT Audit :: list of goods taxed at 4% :: articles on VAT and GST in India :: form 3cd :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment
 
 
« Direct Tax »
 Hopeful of meeting direct tax collection target for this financial year: CBDT
 Bengaluru tops in income tax probes after demonetisation
 Income Tax department rejects black money disclosures of over Rs 2 lakh crore
 CBDT urges people to protect bank accounts from 'unscrupulous elements'
 No change in gold seizure norms in proposed I-T Law amendments
 Direct tax collection will get a long-term boost, Franklin Templeton says
 I-T Act amendments upset calculations of cash hoarders
 Claim tax benefit on costs incurred to evict tenants
 The Integrated Goods And Services Tax Act, 2016
 Here’s what Income Tax Department did leading up to demonetisation
 I-T department asks IDS declarants to pay tax by November 30

Inspite of the uncertainty over DTC, review your insurance needs this season
February, 29th 2012

With just two weeks to go for the Union Budget 2012-13, discussions around the implementation or deferment of the Direct Tax Code are picking up speed again.

Last year, the finance minister had announced that the DTC will come into effect from April 2012. While the general consensus is that the introduction as per the original schedule seems improbable, stakeholders are, nonetheless, busy contesting provisions of the Code that they consider unfavourable.

Recently, Irda chairman J Hari Narayan made a case for the continuation of tax benefits for low-cover life insurance policies (read primarily traditional endowment policies). Separately, however, Irda has circulated a note amongst life insurers expressing concern over the low sum assured offered by certain traditional plans.

DTC Alert



As per the current DTC proposals, only those policies where the sum assured is at least 20 times the annual premium will be eligible for aggregate deductions of up to 50,000. This virtually rules out many regular premium endowment plans where the life cover is quite low, and mainly pure protection policies can meet this criterion. 

What's more, the DTC is silent on whether policies purchased before its implementation will be spared the axe. Hence, Irda has appealed to the government to bring down the stipulated ratio to 10 times. 

At present, deduction of up to 1 lakh under section 80C is available to policies with a life cover of five times the annual premium. 


Assess your protection cover 

Irrespective of the outcome of these discussions, the talk around the quantum of protection cover should get you thinking about the adequate sum assured for your family. That, after all, is the main - financial planners would say sole - purpose of buying a life insurance policy, making term plans ideal form of life insurance. 

/photo.cms?msid=12076162

However, it is common knowledge that in India, many prefer insurance-cum-investment policies, as they do not find the idea of 'spending' on premiums and not receiving any maturity benefits appealing. This is one of the reasons, apart from agents pushing these products, why endowment plans and unit-linked insurance have thrived over the years. 

And, after the September 2010 regulations making Ulip commissions less remunerative for agents, focus has shifted to endowment sales again. These products, which have been popular in the country for decades, promise returns in the form of bonus and maturity proceeds in addition to the protection component. 

In the event of the policyholder's death during the policy tenure, the sum assured is handed over to his or her dependants. The flipside, of course, is that they come with an opaque charge structure and invest predominantly in fixed income instruments, curtailing the return-earning capacity. 

This tax-saving season, ending March 31, agents are likely to hard sell endowment products to you, presenting tax benefits as the cherry on top. 

But before you lap up their offerings, you need to ask certain questions to yourself as well as the agent. Step one, you need to ascertain the amount your family would need to stay financially secure in the event of your death.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Vision

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions