The Union Budget 2004-05 announced a hike in foreign direct investment in insurance from the current 26% to 49% bringing cheer to the private players.

This is in line with the recommendation of the Insurance Regulatory and Development Authority, which had supported the industry's demand for increasing the limit to help raise additional capital.

But levying service tax at the rate 10% on life insurance premium to the extent of the risk portion is a move that has not found favour within the industry. From the industry perspective, the cost of managing insurance monies has increased.

One demand of the industry that has been given the snub is the increase in the income tax exemption limit in pension funds from the current level of Rs 10,000. To that end it is a let down for insurance seekers who were looking for an enhanced tax benefit while buying pension.

But the individual taking insurance should be pleased with the status quo on Section 88 tax rebate benefits on payment of life insurance premium.