Budget 2023: The insurance sector feels the heat of rebate limit increase for the new tax regime.
Budget2023: Insurance sector feels the heat of rebate limit increase for the new tax regime.
Shares of select insurance companies saw increased selling pressure after finance minister Nirmala Sitharaman announced an increase in personal income tax rebate slab limit by Rs 2 Lakh to Rs 7 lakh in the new tax regime. Earlier People with taxable income up to 5 lakhs does not have to pay any tax after the rebate. Now tax payers having taxable income upto 7 lakh will be eligible for income tax rebate under the new tax regime. To avail this rebate tax payers have to forgo the deductions available in the old tax regime. Earlier in old tax regime some tax payers used to invest in insurance policies to save tax which is now not required in new tax regime.
Market veteran Vinod Nair, Head of Research at Geojit Financial Services said “A well-tuned budget with a strong emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting. Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool”.
Reacting to the announcement, General Insurance Corporation of India had declined 12.4 per cent at Rs 161.2, while the benchmark BSE Sensex was up 158 points, or 0.27 per cent, at 59,708 at the market close time. General Insurance Corporation of India was followed by ICICI Prudential Life Insurance Company as the stock was down 11 per cent at Rs 402.55, and HDFC Life Insurance stock dropped 11 per cent at Rs 515.5.
While SBI Life Insurance Company traded 9.3 per cent lower at Rs 1106.4, shares of The New India Assurance Company slipped, 7.7 per cent at Rs 109.6. However, Star Health and Allied Insurance Company is up 0.5 per cent, and ICICI Lombard General Insurance Company share is down 0.5 per cent ends the day on a flat note.
