In a bid to promote long-term investment and increase penetration of life insurance, insurers in India have called on the government to consider granting tax concession and exempt annuity from tax in the budget.

The call was made yesterday as the country’s budget is expected to be presented on 6 July.

Reports quoted the ICICI Prudential Life Insurance executive vice president, Puneet Nanda saying there’s a need for: “A separate limit for long term investments such as life insurance and annuity for income tax exemption.”

Mr Nanda explained that long-term investment could mean any investment with investment horizon of at least five years.

Exemption of tax on annuities is another means of providing incentives for long-term savings, as it prevents double taxation which occurs when the whole annuity payout is taxed.

He added the current tax system allows for such to occur and needs to be changed.

Annuity, which is sold by an insurer, is designed to provide payment to the holder at some time in the future.