The Finance Ministry has withdrawn its proposal to bring life insurance companies under the Minimum Alternative Tax (MAT) regime.Had this provision been adopted by Parliament, life insurance companies would have had to pay MAT at the rate of 18.5 per cent. However, the existing provision prescribes income-tax to be payable at the rate of 12.5 per cent and that too after accumulated loss is wiped out. This, with the amendment in the Finance Bill 2102, will continue.The Finance Minister, Mr Pranab Mukherjee, in a list of amendments to the Finance Bill, said that the provision (amendment to section 115JB of the Income-Tax Act) will not apply to any income accruing or arising to a company from life insurance business.Mr Sunil Jain, Partner, J Sagar Associates, says, “Removal of MAT on income from life insurance business will help players plan their cash flows better given that MAT does impact their cash flows. A positive news for a sector awaiting increase in limits of FDI for years.”
Source: Hindu Businessline
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