 "Insured deposits constitute 28.1% of assessable deposit base at March-end")
The proposal in the Union Budget to tax dividend income in the hands of the recipient will raise the effective rate for life insurance companies, impacting their embedded value (EV) and value of new business margins.
Hitherto, they get a tax benefit on dividend income received on a policy holder’s investments. As a result, their effective tax rate was lower than the 14 per cent corporate tax. With dividend income no longer tax-exempt, product margins will get impacted and EV will take a one-time hit, observes a note by brokerage Jefferies.
Dividend income holds a significant share in
Hitherto, they get a tax benefit on dividend income received on a policy holder’s investments. As a result, their effective tax rate was lower than the 14 per cent corporate tax. With dividend income no longer tax-exempt, product margins will get impacted and EV will take a one-time hit, observes a note by brokerage Jefferies.
Dividend income holds a significant share in
