HDFC Life, ICICI Pru, LIC rally up to 9% after Budget 2024 reduces TDS on insurance payouts

Shares of life insurance companies such as SBI Life Insurance, ICICI Prudential Life, HDFC Life Insurance Company, Life Insurance Corporation of India (LIC) and Go Digit rallied up to 9% on Wednesday, a day after the announcement of a reduction in the Tax-Deducted at Source (TDS) on life insurance payouts in the Union Budget for 2024-25.

The revised TDS rates, as proposed in the Budget 2024, will come into effect from October 1, 2024. Subsequent to the implementation of the new rate, policyholders will begin to receive payouts with the adjusted TDS rate from October 1.

Finance Minister Nirmala Sitharaman announced a reduction in the TDS rate under 194DA of the Income Tax Act to 2% from the existing 5% on insurance payouts in her Budget 2024 speech. With the revision in the TDS rate, policyholders will receive more money upon the maturity of their life insurance policies or when their claims are settled.

Here’s a look at how life insurance companies shares have rallied after the proposal to reduce TDS on life insurance payouts was made in the Union Budget 2024.

ICICI Prudential Life

The company posted an increase in its consolidated profit after tax (PAT) and net premium income in Q1FY25 on a year-on-year basis. The life insurer’s net profit for Q1FY25 surged nearly 9% to ₹224.34 crore compared to ₹206.19 crore in the same quarter of the preceding fiscal. The net premium income increased 12% YoY to ₹7874.66 crore in the June quarter of FY25 against ₹7020.03 crore a year ago.

LIC

HDFC Life Insurance Company

The company posted a year-on-year increase in its consolidated net commission and profit after tax in Q1FY25. The company's consolidated net commission increased 122% to ₹1471.83 crore in Q1FY25 from ₹662.85 crore in the corresponding quarter of the preceding fiscal year. The company’s net profit for Q1FY25 grew nearly 15% to ₹478.97 crore from ₹416.71 crore in Q1FY24.

SBI Life Insurance Company Ltd

The life insurance company’s shares have gained 23.9% in a year and 15.41% in the past six months. The stock has rallied 11.53% in a month and 0.8% in a week.