Page 28 - Insurance Times September 2023

Government policies and regulations also play a pivotal role innovative approach allows project stakeholders to receive
in shaping the insurance landscape for renewable energy. timely payouts based on predefined triggers, facilitating
Supportive policies that promote renewable energy quicker recovery and minimizing financial disruptions.
development can incentivize insurers to create specialized
products and offer competitive rates. Collaboration between As we stand at the crossroads of energy transition, embracing
governments, entire insurance fraternity, and renewable renewable sources is not merely an option; it is a necessity.
The journey towards a sustainable future powered by
energy stakeholders is vital to establish a conducive
environment that fosters sustainable energy initiatives. renewable energy requires collective commitment,
technological innovation, and a shared vision of preserving
our planet for generations to come.
India's journey towards a sustainable energy future is gaining
momentum, with renewable energy sources taking center
Thus, the intersection of renewable energy and insurance
stage as the nation strives to meet its ambitious climate goals.
underscores the inseparable link between sustainable
As the renewable energy sector continues to expand, the
development and risk management. As the world embraces
intersection of renewable energy and insurance plays a crucial
the green revolution, insurance providers are poised to
role in ensuring the success and resilience of India's green
contribute to the success and longevity of renewable energy
transition. projects. By tailoring solutions to address technological,
operational, and financial challenges, the insurance industry
Weather-related risks pose a significant concern for becomes an indispensable partner in advancing a cleaner
renewable energy projects in India. Erratic monsoons, and more resilient energy future.
cyclones, and extreme weather events can impact energy
generation and revenue streams. Parametric insurance, Through concerted efforts, we can usher in an era of clean,
linked to specific weather parameters or energy production abundant, and accessible energy that paves the way for a
levels, offers a viable solution to address these risks. This greener and more prosperous world.

CBDT prescribes rules to calculate income from life insurance

where premium exceeds Rs 5 lakh

The Income Tax department prescribed a mechanism for calculating income proceeds from life insurance policies
where the aggregate annual premium exceeds Rs 5 lakh. The Central Board of Direct Taxes (CBDT) has notified the
Income Tax Amendment (Sixteenth Amendment), Rules, 2023, prescribing rule 11UACA for calculating income with
respect to the sum received upon maturity of life insurance policies wherein the amount of premiums exceed Rs 5
lakh and such policy/policies are issued on or after April 1, 2023.
According to the change, for policies issued on or after April 1, 2023, the tax exemption on maturity benefits under
Section 10(10D) will only be applicable if the aggregate premium paid by an individual is up to Rs 5 lakh a year. For
premiums beyond this limit, the proceeds will be added to the income and taxed at applicable rates. The change in
tax provision with regard to life insurance policies, except ULIP, was announced in the Union Budget 2023-24. AMRG
& Associates Joint Partner (Corporate & International Tax) Om Rajpurohit said according to the formula, any surplus
amount received on maturity would be subject to tax under the head ”income from other sources”.

AMRG & Associates Joint Partner (Corporate & International Tax) Om Rajpurohit said according to the formula, any
surplus amount received on maturity would be subject to tax under the head "income from other sources". AKM
Global Tax Partner Amit Maheshwari said the provision was introduced to nullify tax advantage given to investments
disguised as insurance policies. Since this provision would impact many individuals, especially the rich, CBDT has issued
guidelines to remove difficulties, which is a welcome move. The guidelines are elaborate and give various examples
on the computation of the consideration eligible for exemption, Maheshwari added. The taxation provision for the
amount received on the death of an insured has not been changed and that continues to remain exempt from income
tax.

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