'Practical budget, but timid on reforms'

I think the devil or angels are in the details - so, they need to be studied.

The Budget, however, lacks clarity on any specific measures to curtail black money.

There was neither any significant movement on reforms nor any big-ticket idea to catalyse growth.

There seems to be a continued tendency to tinker with both indirect and direct taxes and to increase excise duties - both of which will have a negative impact on prices of goods.

Overall, a practical budget though a bit timid on giving any direction on further reforms. But given the constraints, we did not expect anything better anyway.

From a life-insurance perspective

The budget did not outline anything on a separate tax exemption limit for life insurance.

We expected a separate limit of Rs 50,000/- for the life insurance premium, apart from the deduction u/s 80C of Rs 1 lakh and Rs 20,000/- for Infrastructure bonds.

Availability of separate tax exemption for life insurance premiums would have encouraged penetration of a long-term product such as life insurance.

Currently, the total tax savings such as PPF, Life insurance premiums, PF contributions, National Savings Certificates etc are covered under Rs 1 lakh limit u/s 80C of the Income tax Act.

Full Coverage: Budget 2011

The time limit of eight years is available for carrying forward tax losses - the same should have been relaxed for life insurance companies, since this Industry has a very long gestation period of eight to 10 years. However, that did not happen.

There are changes proposed in the levy of service tax payable by insurance companies.

On both conventional plans as well as ULIPs, increased service tax have to be effectively borne by the policyholder.

Amitabh Chaudhry did his engineering from BITS Pilani and his MBA from IIM Ahmedabad. Before joining HDFC Standard Life, he was the CEO of Infosys' BPO arm. He has also worked with Bank of America and Credit Lyonnais Securities.