Insurance, direct tax tweaks likely in Union Budget 2025

With the Union Budget session just around the corner, significant legislative changes are anticipated. CNBC-TV18 has learned from sources that the long-anticipated Insurance Amendment Bill is likely to be tabled. This proposal, initially expected during the winter session, was deferred but is now slated for discussion.

This bill aims to enhance foreign direct investment (FDI) in the insurance sector by raising the cap to 100%, introduce composite licensing allowing insurers to offer both life and non-life products, and empower agents to represent multiple insurers.

Furthermore, the government may introduce amendments to the direct tax laws. The primary focus is on simplification, with a significant reduction in the volume of legislation. Sources suggest a target of around 2 lakh words, potentially translating to a 55-60% reduction in the current law.

To improve clarity and accessibility, the government is considering incorporating more tabular depictions of income tax calculations. Additionally, the definitions of the assessment year and fiscal year may be revised. To further streamline processes, income tax forms are also expected to undergo rationalisation.

It’s important to note that while these reforms aim to simplify the tax system and enhance the insurance sector, no major policy changes are currently envisaged.