08-Feb-2012
Source : NDTV
The budget session of the Indian Parliament will begin on 12 March 2012 and the Union Budget for 2012-13 will be presented on 16 March 2012.
The Railways Budget would be presented on 14 March while the Economic Survey would be tabled on 15 March followed by the Union Budget the next day
The budget session would end on 30 March 2012.
Parliamentary Affairs minister Pawan Kumar Bansal confirmed these dates on Tuesday.
The election commission of India’s code of conduct does not allow governments to make policy announcements during elections. Five states are amidst polls. The entire exercise from voting to counting and announcement of results is expected to be completed by 9 March 2012.
Our Mission is to enrich the lives of the people we touch upon; by providing them an ethical advice on the highest quality of financial products that helps them fulfill their responsibilities & build better tomorrows.
Monday, February 20, 2012
Parlimentary panel moots wider slabs for personal income tax
10-Feb-2012
Source : Business Standard
A parliamentary panel is set to recommend sweeping changes in personal income tax slabs proposed in the Direct Taxes Code (DTC) Bill. A draft report prepared by Parliament’s standing committee on finance suggests increasing the income tax exemption limit to Rs 3 lakh a year against Rs 2 lakh proposed in the Bill.
The committee, chaired by Bharatiya Janata Party leader and former Finance Minister Yashwant Sinha, wants a 10 per cent rate to kick in for annual income of Rs 3-10 lakh, according to those in the know. The Bill proposes this rate to be imposed in a slab of Rs 2-5 lakh. The draft report also recommends 20 per cent income tax rate be paid by those earning income of Rs 10-20 lakh a year. This slab was proposed to be Rs 5-8 lakh in the Bill.
Finally, the report wants the government to impose a peak rate of 30 per cent on annual income above Rs 20 lakh, as against above Rs 10 lakh as sought in the Bill. The report is not final and minor tweaking of these suggestions could be incorporated after a meeting tomorrow, according to the persons cited earlier. Tax slabs needed to be progressive, they said, adding, “Most of the assesses would fall in the category of Rs 3-10 lakh a year, which should get a lower income tax rate of 10 per cent.”
The finance ministry expects the standing committee to give its report in the Budget session of Parliament, so that DTC could be introduced from April 1, 2013.
The committee will finalise the report tomorrow and give it to the government. “It is up to the government to table the report in the Budget session or not,” they said.
In fact, the suggestions in the draft report of the committee are much closer to the original discussion paper put out by the finance ministry on DTC.
That paper had suggested a 10 per cent tax rate for Rs 1.6-10 lakh a year, 20 per cent for Rs 10-25 lakh and 30 per cent for income above Rs 25 lakh a year.
But, the paper had also proposed to do away with a host of exemptions. After certain quarters protested, the ministry proposed in the Bill to give some of those exemptions but also narrowed the income tax slabs.
Currently, income of Rs 1.80-5 lakh attracts 10 per cent income tax, Rs 5-8 lakh 20 per cent and above Rs 8 lakh 30 per cent.
The standing committee’s draft report wants the government to cautiously implement the General Anti-Avoidance Rules. These provisions, contained in the Bill, are aimed at authorising the tax department to demand tax in situations where the main motive of a transaction is to have a tax advantage.
These provisions have assumed importance after the government lost the Vodafone case in the Supreme Court. Many believe the Budget may incorporate the proposal, even before the introduction of DTC.
Source : Business Standard
A parliamentary panel is set to recommend sweeping changes in personal income tax slabs proposed in the Direct Taxes Code (DTC) Bill. A draft report prepared by Parliament’s standing committee on finance suggests increasing the income tax exemption limit to Rs 3 lakh a year against Rs 2 lakh proposed in the Bill.
The committee, chaired by Bharatiya Janata Party leader and former Finance Minister Yashwant Sinha, wants a 10 per cent rate to kick in for annual income of Rs 3-10 lakh, according to those in the know. The Bill proposes this rate to be imposed in a slab of Rs 2-5 lakh. The draft report also recommends 20 per cent income tax rate be paid by those earning income of Rs 10-20 lakh a year. This slab was proposed to be Rs 5-8 lakh in the Bill.
Finally, the report wants the government to impose a peak rate of 30 per cent on annual income above Rs 20 lakh, as against above Rs 10 lakh as sought in the Bill. The report is not final and minor tweaking of these suggestions could be incorporated after a meeting tomorrow, according to the persons cited earlier. Tax slabs needed to be progressive, they said, adding, “Most of the assesses would fall in the category of Rs 3-10 lakh a year, which should get a lower income tax rate of 10 per cent.”
The finance ministry expects the standing committee to give its report in the Budget session of Parliament, so that DTC could be introduced from April 1, 2013.
The committee will finalise the report tomorrow and give it to the government. “It is up to the government to table the report in the Budget session or not,” they said.
In fact, the suggestions in the draft report of the committee are much closer to the original discussion paper put out by the finance ministry on DTC.
That paper had suggested a 10 per cent tax rate for Rs 1.6-10 lakh a year, 20 per cent for Rs 10-25 lakh and 30 per cent for income above Rs 25 lakh a year.
But, the paper had also proposed to do away with a host of exemptions. After certain quarters protested, the ministry proposed in the Bill to give some of those exemptions but also narrowed the income tax slabs.
Currently, income of Rs 1.80-5 lakh attracts 10 per cent income tax, Rs 5-8 lakh 20 per cent and above Rs 8 lakh 30 per cent.
The standing committee’s draft report wants the government to cautiously implement the General Anti-Avoidance Rules. These provisions, contained in the Bill, are aimed at authorising the tax department to demand tax in situations where the main motive of a transaction is to have a tax advantage.
These provisions have assumed importance after the government lost the Vodafone case in the Supreme Court. Many believe the Budget may incorporate the proposal, even before the introduction of DTC.
What private insurers sell are not pensions at all: IRDA chief
09-Feb-2012
Source : Business Line
‘The IRDA has faced a lot of criticism from insurance companies on the changes in regulations governing unit-linked pension products. Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority, offers a ringing defence of why there were changes.
While conceding that the circular on those provisions concerning guarantees could have been more ‘happily worded’, he was scathing in his comments on the ‘market’ practices of insurance companies.
He says what the insurance companies claim to sell as pension products are not pensions at all. He says, these companies shift the responsibility to LIC when it comes to commencing the payment part, slyly directing the consumer to LIC for annuities.
Look at that closely - it is a damning indictment of the private life insurance industry and its practices.
Clearly, there is a lot that the insurance industry needs to do to regain trust. Mr Hari Narayan expressed confidence that the industry would fall in line. Somehow, the tone with which he said that gave one the impression that the industry will do just that.
Excerpts:
There is criticism about your guidelines on pension products. There have been frequent revisions. Also, the requirement that there should be a guarantee even for surrendered products, experts say, will throw pricing out of the window. What is your response?
They may have a point there. What we were trying to say is this: If you are selling any product, we want you to say upfront that this is what you will get if you surrender the product, say, in the first year, the second year, or the third year, and so on. You can’t say, I’ll figure it out at that time, or leave it vague. You better specify what you are going to do when the guy signs up the contract.
The circular was not happily worded. The intention was that whatever was the surrender value that you may impose, that should be clear.
The function of surrender involves two things. One, there should be a disincentive to surrender. At the same time, it cannot be a situation where the insurance company makes a hell of a lot of money through surrender income. Then they will encourage products which they know will be surrendered. It can’t be a ‘surrender income’ based industry. Then you are cheating the consumer.
There is a fine line. At the same time, you can’t be incentivising the customer to surrender. So, how exactly I am going to word that balance is the issue. Yes, there was a problem with the wording.
Some companies have stopped selling pension products because of the change in regulations…
That was not the main issue. That’s only an excuse. They stopped because I made one change in the regulation.
What was that?
Wait. Tell me what do you understand by a pension?
Something that is going to provide me an income at a later stage in life. Why do you ask?
That’s what you think. These guys are selling something which they call a pension product - but which doesn’t promise anything like that.
In a pension product, in the first phase, you pay me money. Then you stop, I start paying you money. There is the inflow and, after sometime, there is the outflow. The point when it switches is called the vesting date.
Now, what these insurance companies do is this — when the vesting date comes, they turnaround and say, “we’ll give you only 3 per cent return. You go to LIC because they are giving you a 6-7 per cent return!”
So, as long as the money was coming in, you are happy to call it a pension product. The minute the money starts going out, you create a system whereby the money goes to LIC. So today, almost 99 per cent of all pensions are with LIC. Look at it from the country’s perspective. Can we afford such a high concentration of risk on LIC? Is it wise? Therefore, I said you cannot do this.
If you are selling a product that you call pension, then you jolly well provide the pension at the appropriate time. You can’t hive off your responsibility. You can’t say, “Sorry. Go to LIC.”
I am not saying how much you should pay — because that depends on interest rates and other factors. But you have the responsibility to do it. Otherwise don’t sell such products. Or don’t call it a pension product. Call it by some other name and file your product. I’ll have a look at it.
The only player who is now selling pension products with a conscious knowledge that it is going to pay pensions is LIC. That is one thing in its favour.
There is another important reason we need to look at this carefully. The country has moved away from ‘pay-as-you-go’ to a defined contribution scheme. We have come up with a new pension scheme. Sooner or later, the NPS will come to fruition. At that point of time, what is the competition in the market? There is only one player offering you an annuity. That is Mr LIC. Where is the choice for the customer? So we have to enable other companies also to get into this, so that the customer has a proper choice.
For that to happen, we need a robust derivatives market in India. The two are linked. When the insurance companies tell you that they are not selling pension products, they are telling you only part of the story. They are really not giving any pension. Nor do they have any intention to.
We should develop healthy practices — not only apparently, but really. Those things will separate the serious players from the not-so-serious players. As long as they understand that this is indeed the intention of the regulator, they will fall in line. They will figure it out.
We need to do our stuff. We have taken some steps in that direction — not fully, or adequately, but we are moving in that direction.
Source : Business Line
‘The IRDA has faced a lot of criticism from insurance companies on the changes in regulations governing unit-linked pension products. Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority, offers a ringing defence of why there were changes.
While conceding that the circular on those provisions concerning guarantees could have been more ‘happily worded’, he was scathing in his comments on the ‘market’ practices of insurance companies.
He says what the insurance companies claim to sell as pension products are not pensions at all. He says, these companies shift the responsibility to LIC when it comes to commencing the payment part, slyly directing the consumer to LIC for annuities.
Look at that closely - it is a damning indictment of the private life insurance industry and its practices.
Clearly, there is a lot that the insurance industry needs to do to regain trust. Mr Hari Narayan expressed confidence that the industry would fall in line. Somehow, the tone with which he said that gave one the impression that the industry will do just that.
Excerpts:
There is criticism about your guidelines on pension products. There have been frequent revisions. Also, the requirement that there should be a guarantee even for surrendered products, experts say, will throw pricing out of the window. What is your response?
They may have a point there. What we were trying to say is this: If you are selling any product, we want you to say upfront that this is what you will get if you surrender the product, say, in the first year, the second year, or the third year, and so on. You can’t say, I’ll figure it out at that time, or leave it vague. You better specify what you are going to do when the guy signs up the contract.
The circular was not happily worded. The intention was that whatever was the surrender value that you may impose, that should be clear.
The function of surrender involves two things. One, there should be a disincentive to surrender. At the same time, it cannot be a situation where the insurance company makes a hell of a lot of money through surrender income. Then they will encourage products which they know will be surrendered. It can’t be a ‘surrender income’ based industry. Then you are cheating the consumer.
There is a fine line. At the same time, you can’t be incentivising the customer to surrender. So, how exactly I am going to word that balance is the issue. Yes, there was a problem with the wording.
Some companies have stopped selling pension products because of the change in regulations…
That was not the main issue. That’s only an excuse. They stopped because I made one change in the regulation.
What was that?
Wait. Tell me what do you understand by a pension?
Something that is going to provide me an income at a later stage in life. Why do you ask?
That’s what you think. These guys are selling something which they call a pension product - but which doesn’t promise anything like that.
In a pension product, in the first phase, you pay me money. Then you stop, I start paying you money. There is the inflow and, after sometime, there is the outflow. The point when it switches is called the vesting date.
Now, what these insurance companies do is this — when the vesting date comes, they turnaround and say, “we’ll give you only 3 per cent return. You go to LIC because they are giving you a 6-7 per cent return!”
So, as long as the money was coming in, you are happy to call it a pension product. The minute the money starts going out, you create a system whereby the money goes to LIC. So today, almost 99 per cent of all pensions are with LIC. Look at it from the country’s perspective. Can we afford such a high concentration of risk on LIC? Is it wise? Therefore, I said you cannot do this.
If you are selling a product that you call pension, then you jolly well provide the pension at the appropriate time. You can’t hive off your responsibility. You can’t say, “Sorry. Go to LIC.”
I am not saying how much you should pay — because that depends on interest rates and other factors. But you have the responsibility to do it. Otherwise don’t sell such products. Or don’t call it a pension product. Call it by some other name and file your product. I’ll have a look at it.
The only player who is now selling pension products with a conscious knowledge that it is going to pay pensions is LIC. That is one thing in its favour.
There is another important reason we need to look at this carefully. The country has moved away from ‘pay-as-you-go’ to a defined contribution scheme. We have come up with a new pension scheme. Sooner or later, the NPS will come to fruition. At that point of time, what is the competition in the market? There is only one player offering you an annuity. That is Mr LIC. Where is the choice for the customer? So we have to enable other companies also to get into this, so that the customer has a proper choice.
For that to happen, we need a robust derivatives market in India. The two are linked. When the insurance companies tell you that they are not selling pension products, they are telling you only part of the story. They are really not giving any pension. Nor do they have any intention to.
We should develop healthy practices — not only apparently, but really. Those things will separate the serious players from the not-so-serious players. As long as they understand that this is indeed the intention of the regulator, they will fall in line. They will figure it out.
We need to do our stuff. We have taken some steps in that direction — not fully, or adequately, but we are moving in that direction.
LIC wins top MEIF award
08-Feb-2012
Source : Gulf Daily News
Bahrain: The achievements, innovations and excellence in the regional insurance industry were recognised last night at MEIF 2012 award ceremony at the Gulf Hotel.
The annual MEIF Institutional Excellence Award, which is one of the most prestigious in the industry, recognises institutions that have made a significant contribution to the regional insurance industry.
Life Insurance Corporation (International) (LIC) has been voted as the winner of the award from a short-list of nominees through a unique industry-based voting system.
LIC’s nomination for the award was based on its ability to develop superior and innovative products and services, create a strong business position in the regional insurance market, responsiveness to the complex needs of its customers and its robust financial performance.
Central Bank of Bahrain executive director of financial institutions’ supervision Abdul Rahman Al Baker presented the award to LIC chief executive and managing director R Thamodharan, at a high-profile gala dinner and award ceremony.
"We are extremely delighted to receive the MEIF Institutional Excellence Award 2012," said Mr Thamodharan.
"To receive this award, which is considered one of the most prestigious in the regional insurance industry, is indeed a great honour.
"This award is a recognition of our commitment and dedication to excellence.
"It is a reflection of the collective progress that we are making as a pioneer in the field of insurance services to develop innovative and market-leading products tailored to fulfil the needs of our clients.
’It is a result of the commitment of our people to our corporate values, vision, mission, their hard work and the trust that our customers and shareholders have placed in us," he said.
"This award is as an endorsement of the collective efforts of various resources working together to further advance the regional insurance," Mr Thamodharan added.
Source : Gulf Daily News
Bahrain: The achievements, innovations and excellence in the regional insurance industry were recognised last night at MEIF 2012 award ceremony at the Gulf Hotel.
The annual MEIF Institutional Excellence Award, which is one of the most prestigious in the industry, recognises institutions that have made a significant contribution to the regional insurance industry.
Life Insurance Corporation (International) (LIC) has been voted as the winner of the award from a short-list of nominees through a unique industry-based voting system.
LIC’s nomination for the award was based on its ability to develop superior and innovative products and services, create a strong business position in the regional insurance market, responsiveness to the complex needs of its customers and its robust financial performance.
Central Bank of Bahrain executive director of financial institutions’ supervision Abdul Rahman Al Baker presented the award to LIC chief executive and managing director R Thamodharan, at a high-profile gala dinner and award ceremony.
"We are extremely delighted to receive the MEIF Institutional Excellence Award 2012," said Mr Thamodharan.
"To receive this award, which is considered one of the most prestigious in the regional insurance industry, is indeed a great honour.
"This award is a recognition of our commitment and dedication to excellence.
"It is a reflection of the collective progress that we are making as a pioneer in the field of insurance services to develop innovative and market-leading products tailored to fulfil the needs of our clients.
’It is a result of the commitment of our people to our corporate values, vision, mission, their hard work and the trust that our customers and shareholders have placed in us," he said.
"This award is as an endorsement of the collective efforts of various resources working together to further advance the regional insurance," Mr Thamodharan added.
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