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Friday,27-May-2022

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Hike in premium exemption, indication on GST cut on premium budget expectations of insurers

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GST

An indication on reduction in the Goods and Services Tax (GST) rate on health insurance, giving infrastructure status to healthcare facilities, hiking tax deduction for insurance premium are some the budget wishes listed out by the insurance sector.

Senior industry officials also urged the government to take steps to increase the insurance penetration in the country.

Even though the GST rates does not form part of the union budget, insurers want an indication towards slashing of the rates on insurance premium in the Finance Minister Nirmala Sitharaman’s budget speech.

“Health insurance is an essential commodity and needs to be slotted in the five per cent GST tax slab to make it more affordable to access quality healthcare,” said Anup Rau, MD & CEO, Future Generali India Insurance

A significant reduction in the GST on all personal lines of products-from the existing 18 per cent to five per cent will encourage more people to buy health insurance. For senior citizens, it should be exempted.

According to Rau, increasing the tax deduction limit in Section 80D of the Income Tax Act – from Rs 25,000 to Rs 150,000 – can further help in penetration of health insurance.

“The rising medical costs and the increase in the incidence of critical illnesses make it an unmanageable expense for middle-income and lower-income groups. So, a higher tax deduction limit for health insurance plans is the need,” he argued.

Given the under-penetration of insurance in India and the need to bring a wider gamut of population under the safety net, small ticket size insurance products like micro-insurance, sachet products, etc. can be exempted from GST, Rau added.

The services by the healthcare providers don’t fall under the GST radar while at the same time buyer of the health insurance product pays the same given a large portion of the coverage is directed towards the cost of hospital bills, remarked Yogesh Agarwal, Founder & CEO, Onsurity, an insurance-health tech startup.

“In the upcoming union budget, we request the Government to intensify steps towards increasing insurance penetration in the country, since even today a large part of the population in the country still remains underinsured or uninsured,” Roopam Asthana, CEO & Whole-Time Director, Liberty General Insurance said.

Citing the 2020-21 annual report of the Insurance Regulatory and Development Authority of India (IRDAI) Asthana said, the insurance penetration in India stands at 4.2 per cent of the gross domestic product (GDP) as against a global average of 7.4 per cent.

Asthana said as of March, 2021 the non-life insurance penetration in India stood at barely one per cent and urged the government to slash the GST from 18 per cent.

“Further even though GST is not covered under budget, however policy makers’ should also look towards exempting or lowering GST rates on life insurance products and these should ideally be classified under essential product category,” Tarun Rustagi, Chief Financial Officer, Canara HSBC Oriental Bank of Commerce Life Insurance said.

According to Rustagi, life insurance premium should be given a separate deduction limit of Rs 100,000 under Section 80C of the Income Tax Act.

Also, pension products should be given parity with NPS in tax incentives.

Further, for annuity products, deduction for principal component should be allowed and only the interest accretion should be taxed similar to fixed deposits.

Suitable changes should also be made under section 10(10D) to allow exemptions for all Life Insurance products where life insurance coverage is present which may be on the basis of policy term and sum assured ratio.

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Sacked fund manager slaps legal notice on Axis Mutual Fund

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Fund manager and Chief Dealer at Axis Mutual Fund, Viresh Joshi, who was sacked last fortnight, has served a legal notice to the company challenging what he terms as his illegal termination.

Joshi was first suspended and later relieved of his charge on May 18, as per a statement issued by the AMF on May 19, for his purported role against allegations of ‘front-running’ (or, tailgating) at the company which conducted an internal probe into the matter.

He has hired leading law firm, Mansukhlal Hiralal & Co. to challenge his termination order.

Confirming the development, lawyer Chirag M. Shah told IANS: “We are in communication with Axis Mutual Fund on behalf of our client Viresh Joshi and have duly replied to the unlawful termination notice.”

Shah added that AMF terminated Joshi unceremoniously on unsubstantiated charges of alleged ‘front-running’ and he has sent a notice to the company against the unlawful termination.

The AMF further stated that it had been conducting a suo moto internal investigation into the issue since February 2022 using a reputed external advisor to assist with the ongoing probe.

“Further to our investigation, his conduct and following the decision to suspend him, the employment of Mr. Viresh Joshi has been terminated with effect from May 18, 2022,” said the company.

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Reliance subsidiary SankhyaSutra unveils ‘make in India’ software at Drone fest

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Bengaluru-based subsidiary of Jio Platforms, SankhyaSutra Labs, which makes high-fidelity multi-physics and aerodynamics simulation software, on Friday showcased its products and solutions at the ‘Drone Festival of India 2022’.

According to the company, achieving accurate simulation of turbulent flows often required in aerospace and defence designing is a challenging task due to the involvement of multiple scales of swirling motions, also known as vortices.

SankhyaSutra Labs said it develops next-generation high-fidelity CFD tools that do not use approximate turbulence models.

“When we speak about self-reliance in defence, we often tend to focus on the ability to manufacture various hardware components indigenously,” Dr Sunil Sherlekar, CEO at SankhyaSutra Labs, said in a statement.

“This journey towards self-reliance would be incomplete without indigenous design tools, which are the key enablers of this journey. At SankhyaSutra, we are developing deep technology for India and the world,” he added.

Incubated in 2015, SankhyaSutra Labs has its R&D centre in Bengaluru with target customers across the globe.

The company has planned a major product launch in October this year.

“Accurate and reliable simulations can potentially reduce the need for expensive and time-consuming experiments, such as wind tunnel experiments, which are used in the designing of aircrafts,” said Dr Vinay Kariwala, VP Business Development at SankhyaSutra Labs.

Reliance Industries Ltd had acquired an 83 per cent stake in SankhyaSutra Labs in 2019, with an investment of Rs 216 crore.

Prime Minister Narendra Modi inaugurated the two-day ‘Bharat Drone Mahotsav 2022’ in the capital.

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India Cements to monetise land, increase price by Rs 55 per bag

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Cement major India Cements Ltd will monetise some of its land to settle its debt and for capital expenditure, said a top company official.

He also said, in order to recover production costs that went up owing to drastic increase in coal prices, the company will be increasing the cement prices by Rs 55 per bag in three phases between June and July.

Speaking to reporters here on Friday N. Srinivasan, Vice Chairman and Managing Director said the company would monetise surplus land for repayment of loan and for some capital expenditure.

“We are not in distress sale mode. We have about 26,000 acres of land in Andhra Pradesh and Tamil Nadu. The lands are of different categories,” Srinivasan said.

According to him, the company has to repay about Rs 500 crore of its debt and to that extent land monetisation would happen.

India Cements total debt at the end of last fiscal was about Rs 3,000 crore.

The capital expenditure is not much except for some balancing equipment and waste recovery plant in Chilamkur in Andhra Pradesh.

Srinivasan said the company would increase the cement prices by Rs 55 per bag in three parts — Rs 20 on June 1, Rs 15 on June 15 and Rs 20 on July 1.

He said the company’s products are already premium priced.

According to Srinivasan, the consumer has a choice as cement bags are now available in the price points ranging between Rs 320-450.

When queried that other cement players had expressed their plans to reduce their selling prices Srinivasan remarked: “Don’t compare. All costs have gone up. If I don’t increase the prices, I will runup huge losses.”

With a slow recovery in the southern markets further affected by record rains and floods in the previous quarter, the selling price of cement was under constant pressure resulting in uncompensated increase in the cost of production.

This was further compounded by the reduction in volume as the company as a prudent policy withdrew from the far off markets to focus on home markets.

Meanwhile, the company closed last fiscal with a total income of Rs 4,729.83 crore (FY21 Rs 4,460.12 crore) and a net profit of Rs 38.98 crore down from Rs 222.04 crore logged in FY21.

The company Board has recommended a dividend of Re.1 per share of Rs.10 each.

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