Repeal service tax on premiums

COMMENT/ Deepak Satwalekar, MD, HDFC Standard Life

The growth of the life insurance industry is strongly related to the growth of the overall economy. The Budget is growth-oriented. The announcement to increase the FDI limits in telecom, civil aviation and insurance will send out positive signals.

Those insurance joint ventures, which were constrained by capital availability, will certainly stand to benefit from the enhanced FDI limits.

In order not to put the Indian promoter at a disadvantage, there should be a simultaneous amendment to the Insurance Act, 1938, which mandates a reduction in Indian partner's equity holding to 26 per cent after 10 years.

The imposition of a service tax on life insurance premiums is not just a retrograde step, but also difficult to implement. I would strongly suggest that the decision to impose service tax on insurance premium be reviewed and withdrawn.