The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
India’s steps in the budget to end some exemptions given for tax planning and the
removal of a dividend-distribution tax for companies will weigh on the earnings prospects of insurers.
The lower tax rates under the alternative tax slabs will only apply to those forgoing exemptions, which include investments in certain insurance products. Insurers will be taxed on dividend income, a key source of their profit before tax.
Separately, the government’s plan to sell part of its stake in Life Insurance Corp. of India, which has $434 billion in total assets, may
also take investors’ focus away from insurers that are already listed in the stock market.
Insurance stocks were trading mixed on Monday after suffering declines on the budget day. SBI Life Insurance Co advanced 1.9%, HDFC Life Insurance Co rose 0.7%, while ICICI Prudential Life Insurance Co fell 1.8% in Mumbai. Shares in the three insurers turned oversold for the first time in nearly one year in Saturday’s special trading session.