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There are different kinds of life insurance plans
Some are purely life insurance and some have some investment cum life insurance.
Service tax is applicable on Premium amount as follows
A In case purely life insurance(no investment component)
No service tax is applicable
B In case insurance is investment cum life
Here there can be 2 cases
a)Amount of premium which is payable for life and that payable for insurance is separately intimated to policy holder by Insurance Company
Service tax is applicable on investment component only, not applicable on life insurance component
b)Amount of premium which is payable for life and that payable for insurance is not separately intimated to policy holder by Insurance Company
Service tax is payable
@ 3.5% of gross premium charged in first year and 1.75% during next year +Swachh Bharat Cess+Krishi Kalyan Cess
|
Year |
% of base fare (OLD RATE) |
Effective Rate of Service tax |
Effective Rate of Swachh Bharat Cess |
Effective Rate of Krishi Kalyan Cess |
Total Rate of Service Tax |
|
First Year |
3% |
3.5% |
0.125% |
0.125% |
3.75% |
|
Next Year |
1.5% |
1.75% |
0.063% |
0.063% |
1.88% |
(NEW RATE FROM 1.6.15)
(Earlier,the rates were @ 3% of gross premium charged in first year and 1.5% during next year)
New Amendment
For Single Premium Anuity Insurance Policies,
Insurance Premium is to be paid only in first year and not after that
In this case,
Rate prescribed are 1.4% of Total Premum Charged++Swachh Bharat Cess+Krishi Kalyan Cess
i.e. 1.5%
|
Year |
% of base fare (OLD RATE) |
Effective Rate of Service tax |
Effective Rate of Swachh Bharat Cess |
Effective Rate of Krishi Kalyan Cess |
Total Rate of Service Tax |
|
First Year (Single Premium) |
N/A |
1.4% |
0.10% |
0.10% |
1.5% |
|
Next Year |
N/A |
N/A |
N/A |
N/A |
N/A |
This is applicable only where the amount allocated for investment or savings on
behalf of policy holder is not intimated to the policy holder at the time of providing of service
