Details about service tax on insurance policy in coimbatore for 2015

Q: Do we have to pay service tax on traditional life insurance policies now? I really hope this isn't true!

Shruthi Kishore, Coimbatore

2nd February 2015

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Replies (7)

Though the service tax will not impact the annual premium amount, it will result in lower units for ULIPs. The tax will be adjusted by deducting the equivalent units from your account or by levying the same on the investment fund held by and on your behalf.

Gautham Chandra, Coimbatore

4th February 2015

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Apart from insurance policy, the service tax has been expanded to cover a whole host of charges including policy administration and allocation charges, mortality charge and fund management charges on ULIPs by some private insurers recently. This is going greatly impact the tax collection in the city.

Krish Ravi, Coimbatore

4th February 2015

Comment

The Chennai city region of India Post currently has 3.16 PLI policies and 6.57 lakh RPLI policies in force. The average policy size in RPLI ranges from Rs. 50000 to Rs. 1 lakh in the region while in the case of PLI the average size was Rs. 5 lakh. Imagine the money they would get!

Kirthana Sundar, Coimbatore

4th February 2015

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The additional imposition of service tax won't have much impact on their overall business. The additional 3% (service tax) on premium is a very minuscule amount. In any case, the bulk of their PLI (postal life insurance schemes) are on auto debit mode and now the service tax would also be debited in addition to premium

Manikandan Swami, Coimbatore

3rd February 2015

Comment

Did you know that the PLI (Postal Life Insurance) directorate of India Post has decided to collect the service tax on insurance premium from all PLI and rural PLI policy holders with effect from January 1. This is bound to effect the budget of the common person.

Shruthi Kishore, Coimbatore

3rd February 2015

Comment

What exactly is the service tax rate on insurance policies?

Dale Matthews, Coimbatore

2nd February 2015

Comment

The service tax works out to 3.09% (including education and higher education cess) of the gross premium during the first year and 1.545% (including education and higher education cess) from the second year. It is being collected from the policy holders separately and a consolidated receipt is being issued for the total amount

Dhananjay, Noida

4th February 2015

Hi, You have heard correctly. You should be ready to to shell out service tax for traditional life insurance policies, in you take one, and see a reduction in designated units on unit-linked insurance plans (ULIPs) offered by private insurers.

Suraj Naraynana, Coimbatore

2nd February 2015

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