Insurance sector regulator Insurance Regulatory and Development Authority (IRDA) has written to the government to make changes in the provisions of Direct Taxes Code (DTC) to allow insurance policies, which offer low insurance cover, eligible for tax deductions.
One of the key insurance-related provisions of the DTC is that a policy will not be eligible for tax deduction if it offers a life cover of less than 20 times the annual premium.
"We have written to the government on Direct Tax Code and have asked for changes," said J Hari Narayan, chairman, IRDA on Monday. "We have asked the government to reduce it to 10 times."
He added this provision is not good int the insurance industry. At present, a policy is eligible for tax deduction if it offers a life cover of five times the annual premium.
He also said that insurance companies need to be more transparent and provide customers enough information about the policies, especially those in semi-urban and rural areas.
"Insurance companies need to make sure that the customers have sufficient information about the insurance products," he said.
He also said that the reach and distribution of insurance products can be increased by using the bank branches.