Finance Minister Nirmala Sitharaman yesterday delivered the Union Budget for the fiscal year beginning on 1 April which contains several proposed measures that will have an impact on the insurance sector.
Among the measures is a push to develop infrastructure by strengthening the confidence of private developers wary of development and construction risks. To this end, an Infrastructure Risk Guarantee Fund will be set up to provide prudently calibrated partial credit guarantees to lenders.
Other proposals include:
Economy: accelerating and sustaining growth with interventions in six areas:
i) Scaling up manufacturing in seven strategic and frontier sectors;
ii) Rejuvenating legacy industrial sectors;
iii) Creating “Champion MSMEs”;
iv) Delivering a powerful push to Infrastructure;
v) Ensuring long-term energy security and stability; and
vi) Developing City Economic Regions.
Employee Contribution Deductions: an employer can claim a deduction for employee contributions if the amount is credited to the employee's account in any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act, on or before the due date for filing income tax returns.
Non-Life Insurance Business Profits: rationalise the computation of profits for insurance businesses other than life insurance. Any amount previously added to the income because tax was not deducted or paid will be allowed as a deduction in the tax year when that tax is actually deducted or paid.
Motor Accident Claims: Any interest awarded by the Motor Accident Claims Tribunal to a natural person is proposed to be exempt from income tax, and the related TDS (Tax Deducted at Source) will be removed.
Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources): launch Bharat-VISTAAR—a multilingual AI tool that shall integrate the AgriStack portals and the ICAR package on agricultural practices with AI systems. This will enhance farm productivity, enable better decisions for farmers and reduce risk by providing customised advisory support.
SHE-Marts for Rural Women-led Enterprises: help women take the next step from credit-led livelihoods to being owners of enterprises. Self-Help Entrepreneur (SHE) Marts will be set up as community-owned retail outlets within cluster-level federations.
“Champion SMEs”: Recognise MSMEs as a vital engine of growth and groom them to become “Champions” via a three-pronged approach offering:
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equity support through an SME Growth Fund and topping up the Self-Reliant India Fund set up in 2021, with INR20bn ($218m) to continue support to micro enterprises and maintain their access to risk capital;
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liquidity support, such as introducing a credit guarantee support mechanism through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme; invoice discounting on the TReDS platform (TReDS is an online platform set up to facilitate MSMEs to unlock working capital by converting their receivables into cash), etc;
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professional support, such as facilitating professional institutions to design short-term, modular courses and practical tools to develop a cadre of accredited paraprofessionals who will help MSMEs meet their compliance and regulatory requirements at affordable costs.