Rajendra K Khetan, managing director, Everest Insurance
The budget must address some of the key issues not only for the sectorâ€™s benefit but for the governmentâ€™s benefit also.
â€¢ Insurance should have exemption from 13 per cent VAT.
â€¢ Abolish tax on reinsurance commission. Do not withhold tax interset on premium or on commission of local reinsurance since advance tax is already charged on the total.
â€¢ The seven per cent insurance premium or Rs 10,000 whichever is lower should be treated as rebate on tax and not as deduction on taxable income.
â€¢ Tax is imposed on the compensation paid in case of death to the insured or on maturity. Since such amounts are not incomes but rather compensations, they should not be taxed.
â€¢ Revenues are recognised on accrual basis. The Insurance Board should come up with a circular for making additional provisions on uncollected premiums.
â€¢ Due to the mandatory requirement by the regulatory body for the policies to be in Nepali, it becomes difficult and time-consuming to get translations to forward required documents to reinsurers. All reinsurers today are dealing in English language.
â€¢ In order to train employees, there should be training institutes in the country.
â€¢ With accession to WTO, there will be foreign companies. Criteria for merging should be implemented for small companies.
â€¢ Lower tax rate in line with other service industry will help the insurance industry to grow stronger. Service charges should be charged on realistic income and double fees charged on local reinsurance should be prevented.
â€¢ Trekking, motor and manufacturing plants should be made mandatory to be insured.