BUDGET PROPOSALs : IMPACT OF BUDGET ON INSURANCE INDUSTRY

1. REBATE under section 80 C will be available only if premium in a year is UP TO 10% of SUM ASSURED (i.e. rebate will be available up to ONLY 10% of SUM ASSURED)

2. MATURITY proceeds will be exempt ONLY IF PREMIUM PAYABLE IN ANY YEAR IS 10% of SUM ASSURED or less than 10% of S.A.

5. In section 10 of the Income-tax Act,—

(A) in clause (10D), with effect from the 1st day of April, 2013,—

(i) in sub-clause (c),—

(I) after the words, figures and letters “the 1st day of April, 2003”, the words, figures and

letters “but on or before the 31st day of March, 2012” shall be inserted;

(II) for the word “assured:”, the words “assured; or” shall be substituted;

(ii) after sub-clause (c) and before the first proviso, the following sub-clause shall be inserted,

namely:—

“(d) any sum received under an insurance policy issued on or after the 1st day of April, 2012in respect of which the premium payable for any of the years during the term of the policyexceeds ten per cent. of the actual capital sum assured:”;

(iii) in the first proviso, for the words “this sub-clause”, the words, brackets and letters

“sub-clauses (c) and (d)” shall be substituted;

(iv) in the second proviso, for the words “this sub-clause”, the word, brackets and letter

“sub-clause (c)” shall be substituted;

(v) the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so

numbered, the following Explanation shall be inserted, namely:—

‘Explanation 2.—For the purposes of sub-clause (d), the expression “actual capital sum

assured” shall have the meaning assigned to it in the Explanation to sub-section (3A) of

section 80C;’;

(B) in clause (23C), after the sixteenth proviso, the following proviso shall be inserted and shall

be deemed to have been inserted with effect from the 1st day of April, 2009, namely:—

“Provided also that the income of a trust or institution referred to in sub-clause (iv) or

sub-clause (v) shall be included in its total income of the previous year if the provisions of the first

proviso to clause (15) of section 2 become applicable to such trust or institution in the said

previous year, whether or not any approval granted or notification issued in respect of such trust

or institution has been withdrawn or rescinded;”;

24. In section 80C of the Income-tax Act, with effect from the 1st day of April, 2013,—

(i) in sub-section (3), for the words “insurance policy other than a contract for a deferred annuity”,

the words, figures and letters “insurance policy, other than a contract for a deferred annuity, issued

on or before the 31st day of March, 2012,” shall be substituted;

(ii) after sub-section (3), the following shall be inserted, namely:—

‘(3A) The provisions of sub-section (2) shall apply only to so much of any premium or other

payment made on an insurance policy, other than a contract for a deferred annuity, issued on or

after the 1st day of April, 2012 as is not in excess of ten per cent. of the actual capital sum

assured.

Explanation.—For the purposes of this sub-section, “actual capital sum assured” in relation to

a life insurance policy shall mean the minimum amount assured under the policy on happening of

the insured event at any time during the term of the policy, not taking into account—

(i) the value of any premium agreed to be returned; or

(ii) any benefit by way of bonus or otherwise over and above the sum actually assured,

which is to be or may be received under the policy by any person.’.

25. In section 80D of the Income-tax Act, with effect from the 1st day of April, 2013,—

(a) in sub-section (1), for the words “, other than cash,”, the words, brackets, figure and letter “as

specified in sub-section (2B),” shall be substituted;

(b) in sub-section (2),—

(A) in clause (a), after the words “the Central Government Health Scheme”, the words “or any

payment made on account of preventive health check-up of the assessee or his family” shall be

inserted;

(B) in clause (b), after the words “parents of the assessee”, the words “or any payment made on

account of preventive health check-up of the parent or parents of the assessee” shall be inserted;

(c) after sub-section (2), the following sub-sections shall be inserted, namely:—

“(2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on

account of preventive health check-up, the deduction for such amounts shall be allowed to the

extent it does not exceed in the aggregate five thousand rupees.

(2B) For the purposes of deduction under sub-section (1), payment shall be made by—

(i) any mode, including cash, in respect of any sum paid on account of preventive health

check-up;

(ii) any mode other than cash in all other cases not falling under clause (i).”;

(d) in sub-section (4), in the Explanation, for the words “sixty-five years”, the words “sixty years”

shall be substituted.

26. In section 80DDB of the Income-tax Act, in the Explanation, in clause (iv), for the words

“sixty-five years”, the words “sixty years” shall be substituted with effect from the 1st day of April, 2013.

27. In section 80G of the Income-tax Act, after sub-section (5C), the following sub-section shall be

inserted with effect from the 1st day of April, 2013, namely:—

“(5D) No deduction shall be allowed under this section in respect of donation of any sum exceeding

ten thousand rupees unless such sum is paid by any mode other than cash.”.

28. In section 80GGA of the Income-tax Act, after sub-section (2), the following sub-section shall be

inserted with effect from the 1st day of April, 2013, namely:—

“(2A) No deduction shall be allowed under this section in respect of any sum exceeding ten

thousand rupees unless such sum is paid by any mode other than cash.”.