A fairly pragmatic Budget: T R Ramachandran

TR Ramachandran, CEO & MD, Aviva India, expressed pleasure at the government's intent to table various financial sector bills in Parliament.

In his reaction to the Union Budget, he said: "The budget re-affirms the FM's intent to adhere to the DTC datelines. Therefore, the final draft of the discussions, which will be released later this year, assumes importance. We will await the release of this paper to see if the industry’s demands put forward earlier will find mention in the discussion paper. These were in the areas of taxing the maturity proceeds of life insurance policies and the taxation format."

He also spoke about the FM's proposal to levy service tax on the investment component of the traditional life insurance policies. "Under such policies, insurers do not levy a separate fund management charge. Therefore, how the taxable value will be determined is yet to be notified by the government," he said.

He delved into the current framework of traditional life insurance policies: "In case of pure term life insurance policies, normal service tax of 10% is applicable. However, in case of traditional endowment life insurance products, wherein it is not possible to segregate the mortality premium and the premium attributable to investment, service tax is payable at a gross rate of 1% of the total premium."