New Direct tax code which will be implemented from 01.04.2012 narrowing the Tax savings. Mutual Funds (ELSS) and Unit linked insurance plans excluded from tax saving instruments and the first Rs. 1,00,000/- allows only government securities and P.F. Life Insurance, Tuition fee and Mediclaim included in other Rs. 50,000/- exemption. But the LIC should be pure LIC, means it should not include any ULIP or money back plans. It should be term insurance and the annual premium should not be more than 5% of the sum assured. So most of the present LIC policies are excluded from exemption.
Principal amount of housing loan reimbursement is also excluded from Tax exemption.
In the first step LTC included in taxable income and now there may be a change that LTC exemption will be continued.
As a whole the the New Direct Tax code is not providing any additional benefit to tax payer. The Nil Tax limit is increasing, but after two years it may normally be increased near about Rs. 2,00,000/-
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With Tax Saving instruments being Limited under the new Direct Tax Code, Pvt Players offering Mutual Funds and ULIPS would have to search for some new opportunity…
And even if ULIP win the Case which they are battling against, even then no-one is going to opt for ULIPS as only pure insurance policies would be eligible for Deductions