Post Budget reaction - Rushabh Gandhi - Director, Sales & Marketing, IndiaFirst Life Insurance

Immediate Annuity plans provide regular income in the hands of the customer. The customer pays a lump sum amount to the insurer who in turn starts paying 'annuity' i.e. regular payouts structured to be paid for a lifetime and that only starts when one is deemed to have retired.

Budget 2016 proposes to reduce service tax burden on single premium annuity plans. Called the Immediate Annuity plans in the insurance industry, the composition rate of service tax on single premium annuity (insurance) policies is proposed to be reduced from 3.5% to 1.4% of the premium charged. This will translate into higher regular income / returns in the hands of the customer. In absence of a formal social security structure and an ageing population, this is definitely a welcome move.

Source : Equity Bulls

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