Life insurers may gain from debt MFs being taxed at marginal rate

Experts say they may now be slightly better placed as customers looking for tax-free returns under Rs 5 lakh investment a year may now choose their guaranteed products

Subrata Panda Mumbai
Life Insurance

Removal of long-term capital gains tax (LTCG) with indexation benefits status on debt mutual funds might have evened out the playing field for long-term debt products, even as the life insurance industry has not been granted any of the relaxations it sought from the finance ministry. Experts said with this change, the insurance industry might find itself slightly better-placed as customers looking for tax-free returns under Rs 5 lakh investment per year may choose guaranteed products of life insurance companies.
The Finance Bill tabled in Parliament by the finance minister did not have any amendments to the tax changes proposed by the government in the Union Budget this year. “…the change in taxation for debt mutual funds (MFs) bridges the tax arbitrage and brings all debt products at par,” said CLSA in a note on Friday.
“So, life insurers, from being a superior product pre-Budget (no tax on debt savings) moved to being an

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First Published: Mar 24 2023 | 7:13 PM IST

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