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Avoid buying life insurance just to save income tax

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Mumbai: Despite there exists a general assumption that life insurance is a medium to avoid the income tax liability to a huge limit, one shouldn’t think of saving income tax as his main aim of purchasing a life insurance policy. However, this is a hugely believed wrong concept. The life insurance deals has grown rapidly in India because of the efforts put up by million agents, and lakhs of employees of insurance firms like LIC, who showed the importance of financial security through life insurance to nearly each household in urban and rural areas, the Financial Express reported.

The report states, the phenomenal increasing efficiency of insurance salesmen in the past quarters of a fiscal, nonetheless, believes on the fact that life insurance is sold just for saving personal tax. It’s partly correct that in the last quarter most people concentrated on selling and buying life insurance for such benefits. There exists a large unit of people who would like to reduce tax liability after paying life insurance premium in the required year.

Under section 80C of the Income Tax Act, 1961, one can avail deductions from income on premium payment to purchase and continue the current life insurance policy on his own life, wife and child. U/s 80C allows a maximum deduction limit till Rs 1.5 lakh. However, the tax bracket includes investments made in deferred annuity policies and payment to provident fund, investment in ELSS of the mutual funds. This is in addition to the premium paid under group savings linked insurance schemes.

 

The primary reason to buy a life insurance policy should be the price of a human life which needs to be exchanged using the policy if the insured passes away while he is earning. The qualifying premium amount for such deductions from income cannot be above 10 per cent of the sum guaranteed. However, persons suffering from serious disability or disease can get deductions from premium till 15 per cent of the sum guaranteed. Policies taken before April 1, 2012 can get a fixed deduction of 20 per cent of the sum ascertained.

Policyholders cannot avoid deductions from taxable income if they end a policy quickly in the upcoming years for which deductions have previously been taken. If the life insurance policy is claimed by single premium mode, do not give away the policy before completing two years from the date of first premium received. In case of unit linked insurance plans, the retention period is five years minimum and for the rest two years.

Few life insurers provide health insurance or important health insurance coverage as extra benefit under the life insurance policy. A separate deduction till Rs 25,000 can be claimed by the policyholder u/s 80D. The amount can touch till Rs 30,000 if a senior citizen has such policy. One paying premium for their parents can also avail such deductions.

The maturity earnings earned by the policyholders or their representatives/successors are totally exempted from tax liability u/s 10 (10D). However, maturity earnings in terms of Keyman insurance policy us 80DD are not exempted from income tax.

Life insurance is a suitable tool to offer financial security to the persons who rely on the earning members. The tax exemptions are only incentives paid by the government for motivating people to purchase life insurance in the un-availability of comprehensive social security system. Income tax benefits must be taken up as a reason to buy life insurance. Persons who assume that life insurance business banks up on tax efficiency to survive must change their understanding of the greatest financial tool, the Financial Express reported.


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MPC to meet six times during 2019-20: RBI

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Mumbai: The Monetary Policy Committee (MPC), which decides on key interest rates, will meet six times during the next financial year, the Reserve Bank of India (RBI) said.

The first meeting of the six-member MPC to decide on the first bi-monthly monetary policy statement for 2019-20 will be held from April 2 to 4.

The policy will be announced on April 4. Headed by RBI Governor Shaktikanta Das, the committee also includes two representatives from the central bank and three external members.

 

The external members are Indian Statistical Institute professor Chetan Ghate, Delhi School of Economics Director Pami Dua and Indian Institute of Management-Ahmedabad professor Ravindra H Dholakia.

According to the schedule provided by the RBI, the second meeting of the MPC in the next fiscal will be held on June 3, 4 and 6; third meeting (August 5-7); fourth meeting (October 1, 3 and 4); fifth meeting (December 3-5) and sixth meeting (February 4-6, 2020).

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SBI raises Rs 1,251 crore by issuing Basel III-compliant bonds

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New Delhi: The country’s largest lender State Bank of India (SBI) said it has raised Rs 1,251.30 crore by issuing Basel III-compliant bonds.

“The Committee of Directors for Capital Raising at its meeting held today on 22 March 2019 deliberated and accorded approval to allot 12,513 non-convertible, taxable, perpetual, subordinated, unsecured Basel lll-compliant additional tier-I bonds, for inclusion in additional tier-I capital of the bank…aggregating to Rs 1,251.30 crore,” SBI said in a regulatory filing.

The bonds with a face value of Rs 10 lakh each bears a coupon rate of 9.45 per cent per anum payable annually with call option after 5 years or any anniversary date thereafter, it said. The bonds were subscribed on Friday, it added.

 

State Bank of India (SBI) also said the central board of the bank at its meeting held has accorded its approval for extension of validity period for raising equity capital of up to Rs 20,000 crore from market by way of follow-on public offer, qualified institutional placement, preferential allotment, rights issue or any other mode or a combination of these till March 31, 2020.

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Sebi fines 4 entities Rs 27 lakh for fraudulent trading in BSE stock options

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New Delhi: Markets regulator Sebi imposed a total penalty of Rs 27 lakh on four entities for indulging in fraudulent trade in illiquid stock options segment of BSE.

Umapati Oil Mill and Ginning Factory, Yudhbir Chhibbar, Kasturbhai Mayabhai Pvt Ltd and Vimladevi Shyamsunder Khetan are the four entities, according to Sebi’s separate orders.

fter observing a large-scale reversal of trades in the BSE’s illiquid stock options segment, Sebi conducted a probe from April 2014 to September 2015.

 

Following the probe, the regulator found that the trades executed by the entities were not genuine as they were reversed within few seconds with same counter parties with significant difference in price, resulting in profit to the entities.

Securities and Exchange Board of India (Sebi) said it was a deliberate attempt to deal in such a fashion and not a mere coincidence.

The trades executed by the entities were not genuine and created an appearance of artificial trading volumes, thereby violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, Sebi noted.

Accordingly, a fine of Rs 8.7 lakh and Rs 8.4 lakh were imposed on Yudhbir Chhibbar and Vimladevi, respectively while a penalty of Rs 5 lakh each was levied on Umapati Oil Mill and Kasturbhai Mayabhai Pvt Ltd, totalling Rs 27.1 lakh.

In a separate order, Sebi imposed a total fine of Rs 6 lakh on four promoters of Artech Power Products for delayed disclosures to exchanges regarding their change in the shareholding in the company.

Ranjith Vijayan, I V Vijayan, Repsy Vijayan and Resmi Vijayan are the four promoters, according to Sebi’s order.

The promoters have deprived the vital information to the public by non-disclosure /delayed disclosure as mandated by the Takeover Regulations, Sebi noted.

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