Kathmandu. Representatives of the Life Insurance Association of Nepal on Monday drew the attention of Finance Minister Bishnu Prasad Paudel to the concerns of the insurance sector regarding the upcoming budget. The team led by the association’s president, Poshti Raj Paudel, drew the attention of Finance Minister Paudel to issues including tax rates, loan letters, etc.
The association has requested the Finance Minister to make arrangements to deduct up to Rs. 1 lakh as life insurance premium from taxable income while calculating personal annual taxable income. Currently, there is a facility to deduct a total of Rs. 40 thousand as life insurance premium from annual taxable income. The association believes that increasing the limit on the amount of deduction for insurance premiums from taxable income will help expand the benefits of insurance.
According to the association, the Finance Minister has been suggested to follow international practice while calculating the tax rate on the turnover and income of life insurance companies as corporate taxpayers. Similarly, the association has demanded that all returns received from investments should be considered taxable income from the point of view of tax assessment, and that expenses incurred by insurers for claim payments, insurance policy bonus payments should be accounted as expenses.
While the government has been collecting 15 percent profit tax on the returns received from bonds, the association has also put forward a demand to limit it to 5 percent for life insurance. The association has also suggested issuing long-term insurance bonds to utilize the insurance fund collected by the insurance companies for long-term development plans and areas of national importance.
In response, Finance Minister Paudel assured that the ministry is positive about reviewing the existing tax rate if it helps in increasing the size of the insurance business. He invited the association’s representatives to participate in the Revenue Advisory Committee meeting and requested them to submit suggestions on ways to increase revenue.
