Budget 2025: LIC, HDFC Life, ICICI Prudential Shares Fall On ULIPs' Capital Assets Status Clarification
This brings the gains from insurance within taxation rules applied to equity and mutual fund investments.
Shares of Life Insurance Corp., HDFC Life Insurance Co., SBI Life Insurance Co. and ICICI Prudential Life Insurance Co. declined on Saturday after the government introduced amendments to the Income Tax Act to clarify on the status of Unit Linked Insurance Policies as capital assets for taxation purposes.
The government also announced a rise in the foreign-direct-investment limit in insurance to 100% in the Union Budget 2025–26.
During her budget speech, Finance Minister Nirmala Sitharaman proposed raising foreign direct investment limit from 74% to 100% for companies that invest the entire premium in India.
The government also plans to reduce net-owned funds requirements for foreign reinsurers to Rs 1,000 crore from the earlier Rs 5,000 crore. Net-owned funds for a foreign reinsurer is the minimum amount of capital or financial resources that the company must maintain to operate in India.
"This will now help to attract more foreign capital, enhance underwriting capacity and foster innovation through global partnerships," said Sumit Bohra, president of Insurance Brokers' Association of India.
The decision on nil income tax payable up to Rs 12 lakh income would make this segment of consumers a target market for buying increased insurance cover.
Star Health & Allied Insurance was leading the rally the most as it surged 6.9% to the day's high of Rs 463.15 apiece. It was trading 1.7% higher at Rs 441.35 apiece as of 1:20 p.m.
Shares of Max Healthcare Institution surged 4.12% to the day's high of Rs 1,105 apiece. It was trading 1.94% higher at Rs 1,082.60 apiece as of 1:21 p.m.
Shares of SBI Life advanced nearly 3% to an intraday high of Rs 1,528 apiece. Shares of ICICI Prudential rose 4.42% to the intraday high of Rs 643.20 apiece.
General Insurance Corp., ICICI Lombard General Insurance Co., Go Digit General Insurance Co., the New India Assurance Co., HDFC Life Insurance Co., LIC and were all trading in the green. However, around 1:23 p.m. the stocks pared their gains and were trading in the red.
The stocks of ICICI Prudential led the fall, followed by SBI Life and HDFC Life. Shares of ICICI Lombard were down over 3%, while LIC fell over 2.51%.
