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Taxpayers may get some relief over and above the current ceiling of Rs 1 lakh against various saving instruments if the Finance Ministry accepts the suggestions currently before it.
The Government is also mulling introducing a ‘grandfathering’ provision in existing life-insurance policies that are eligible for a tax break.
The ‘grandfathering provision’ means that all tax benefits given under a contract in a life insurance policy bought today under existing tax provisions will continue even after that particular tax provision is withdrawn or amended.
These are among eight issues related to direct and indirect taxes that the Finance Ministry has agreed to consider.
“I have asked the Department of Revenue and the CBDT (Central Board of Direct Taxes)/CBEC (Central Board of Excise and Customs) to complete examination of the above suggestions by October 10, so that appropriate decisions may be announced shortly there after,” Finance Minister P. Chidambaram announced.
The Government is also mulling introducing a ‘grandfathering’ provision in existing life-insurance policies that are eligible for a tax break.
The ‘grandfathering provision’ means that all tax benefits given under a contract in a life insurance policy bought today under existing tax provisions will continue even after that particular tax provision is withdrawn or amended.
These are among eight issues related to direct and indirect taxes that the Finance Ministry has agreed to consider.
“I have asked the Department of Revenue and the CBDT (Central Board of Direct Taxes)/CBEC (Central Board of Excise and Customs) to complete examination of the above suggestions by October 10, so that appropriate decisions may be announced shortly there after,” Finance Minister P. Chidambaram announced.
Separate limit
On the specific issue of enhancing the total tax deduction limit, Chidambaram said, “The Department of Revenue will examine whether, in addition to NPS (New Pension Scheme), some insurance products as approved by IRDA may be included in the separate limit over and above the limit of Rs 1 lakh under Section 80(C) of the Income-Tax Act for the purpose of income-tax deduction on the premium paid.”
He also announced that the CBDT will examine whether existing policies can be ‘grandfathered’ whenever changes are made to direct tax laws so that the changes apply only to policies prospectively.
On the indirect tax side, the Minister directed the CBEC to take a view on service tax provisions for the life insurance sector.
Shishir.Sinha@thehindu.co.in
He also announced that the CBDT will examine whether existing policies can be ‘grandfathered’ whenever changes are made to direct tax laws so that the changes apply only to policies prospectively.
On the indirect tax side, the Minister directed the CBEC to take a view on service tax provisions for the life insurance sector.
Shishir.Sinha@thehindu.co.in
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