Soon, you may have to spend a fixed portion of your tax savings investments for buying insurance and pension products.
The finance ministry is considering a proposal to earmark a particular sum of investment for insurance and pension products, out of the total exemption amount available to the individuals, to mobilise household savings into these sectors, sources said.
An announcement is likely to be made in the upcoming budget.
The move is aimed at popularising these products among consumers while boosting the savings rate. It is also likely to help in financing the cash-starved infrastructure sector, besides, increasing the insurance penetration in the country.
“This is one of the proposals….the ministry would look into it and examine to see if this would actually help tax payers and the economy,” an official source who did not wish to be identified told Hindustan Times.
The government is also likely to further increase income tax exemption limits to shore up the sagging savings rate in the country in the budget on February 28.
According to the 12th Five-Year Plan, an expenditure of $1.2 trillion would be required to develop the infrastructure sector. “The insurance and pension sectors would be critical in garnering resources for this (infrastructure sector),” the official said.
The penetration level in the life insurance sector currently stands at 4.4% and 0.76% in the non-life segment.
The insurable population in India is likely to touch 750 million by 2020, according to various estimates.