Budget 2024 expectations: Extending tax exemption for pension and annuity plans

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Interim Budget 2024 on 1 February 2024. Making taxes simpler or removing them for pension and annuity products will encourage more people to invest in these important financial protections, believe experts.

Investing in pension and annuity products is crucial for income after retirement. “It is proposed to the government to consider extending the application of the current ₹50,000 tax exemption for the National Pension Scheme under Section 80CCD(1B) to pension and annuity plans of insurance companies that will provide a more level playing field for such similar products and encourage increased investments," said Prashant Tripathy, MD & CEO, Max Life Insurance.

Alongside, it is suggested to consider zero rating of pension and annuity plans, i.e., setting a GST rate of 0% for the said plans, which will also help lessen the tax load for people receiving pensions and thus enhance financial security for more citizens, added Prashant Tripathy. Satishwar B, MD & CEO, of Aegon Life Insurance, also thinks that the current ₹50,000 tax exemption for NPS under Section 80CCD(1B) should also apply to pension and annuity plans to encourage more people to use them.

“We propose to the government to consider introducing a separate tax deduction limit for term life insurance under the old tax regime, as the current Section 80C also covers other tax-saving products like PPF, Sukanya Samriddhi Scheme, ELSS, etc. Additionally, there should also be an allowance of deduction for term life insurance under the new tax regime.