LIC Managing Director Ratnakar Patnaik on Monday urged the government to consider granting a full Goods and Services Tax (GST) exemption for the life insurance
sector. Patnaik said that such a move would enable insurers to claim input tax credit (ITC) and lower operational costs. Speaking at the CII Financing Summit, the LIC MD welcomed the government’s recently announced decision to reduce GST on all individual life and health insurance premiums to zero from September 22. However, he emphasised that bringing the sector under the GST-exempt category would provide a greater financial boost to insurers. “My small request will be… it is zero taxation. Can it be GST exempt? That will help us have some input tax credit in place,” he said. Calls for reclassification of government securities as infrastructure investments Patnaik also appealed to policymakers to classify excess holdings of government securities and state development loans as investments in infrastructure and housing. He argued that since these instruments fund developmental projects, they should qualify under the mandated investment categories and noted that insurers currently hold just over 9 per cent of their portfolio in housing and infrastructure, below the 15 per cent mandatory requirement. Seeks review of tax on high-value policy maturity proceeds The LIC MD further urged the government to revisit the three-year-old rule that taxes maturity proceeds of policies with annual premiums exceeding Rs 5 lakh. Patnaik suggested raising the threshold to Rs 10 lakh to encourage long-term savings and boost fund mobilisation. “Is it time to upgrade or revise upwards to up to Rs 10 lakh, so that the maturity proceeds are tax-free?” he asked. Patnaik reaffirmed LIC’s commitment to supporting national development through investments in corporate bonds and government securities. NSE’s Ashishkumar Chauhan flags intrusive FPI rules At the same summit, NSE Managing Director and CEO Ashishkumar Chauhan cautioned that India’s increasingly stringent disclosure requirements for foreign portfolio investors (FPIs) may be deterring global investors. “The amount of information we ask for is very, very intrusive. Many of them do not want to give that information, and so they are staying away,” Chauhan said. Calls for standardisation of market volume metrics Chauhan also highlighted the need to standardise how market volumes are reported, adding that India often presents data in ways that overstate its global market position. He noted that while India claims leadership in derivatives volumes, trading in US stock options—on premium terms—far surpasses Indian markets. “On premium terms, the US does five times more every month, and sometimes a single scrip like Tesla does more than India,” he pointed out. Chauhan stressed that accurate data representation is essential for effective policy formulation.
