Mixed bag for non-life cos

03-Mar-2010

IT HAS been a mixed bag for nonlife insurance companies in the Budget. While the government has rolled back its decision to tax unrealised gains on investments, it has decided to impose withholding tax on all cross-border payments. Last year, the finance minister had introduced a tax on appreciation in the value of investments made by non-life companies. That has been withdrawn.

"The appreciation in the value of investments, being in the nature of unrealised gain is not taken into account for determining profit or loss of non-life insurance business as per IRDA regulations. It is, therefore, proposed that the unrealised gains due to appreciation in the value of investments will not be included in the total income," according to the Budget documents. This amendment is proposed to take effect from April 1, 2011 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent years. "General Insurance Council had made a representation that unrealised gains should not be taxed and the Budget has withdrawn this tax," said SL Mohan, chief executive of General Insurance Council.

Source : www.insuremagic.com