Service tax rates for the F.Y. 2013-2014

Service tax rates for the F.Y. 2013-2014

CO/F&A/Service tax/102                                                                                20.12.2013

Circular No.EDA/ZDB/966

TO ALL THE OFFICES OF THE CORPORATION

RE: Service tax rates for the F.Y. 2013-2014

As per Rule 6(7A) of Service tax Rules, the Insurer has the option to pay service tax on life insurance business on the following basis w.e.f 1.4.2012 which is also applicable for the F.Y. 2013-2014:

(i) @12.36% on the gross premium charges from a policyholder reduced by the amount for investment or savings on behalf of the policyholder, if such amount is intimated to the policyholder at the time of providing service

(ii) @12.36% on the premium where the entire premium paid by the policyholder is only towards risk cover in life insurance

(iii) 3.09% of the premium charged from the policyholder in the first year and 1.545% of the premium charged from the policyholder in the subsequent year (for all the remaining policies which are not covered under (i) and (ii) mentioned above)

Kindly note that the above mentioned service tax rates includes Education Cess and Higher Secondary Education Cess (HSEC)

Type of plans for Service tax rates:

1.ULIP plans and ULIP type plans

For all the ULIP plans, service tax (including Education cess and HSEC) shall be charged @12.36% on the charges. For Non Linked plans (which are ULIP type) service tax (including education cess and HSEC) shall be charged @ 12.36% on the charges.

2.Terms Plans and Health Plans

For Term Assurance plans and Health plans where the entire premium is towards rsik premium, service tax (including Education cess and HSEC)shall be charged @12.36% on the premium (i.e. first year premium, renewal premium and single premium)

3.Other Plans

For Conventional plans, Endowment plans, Annuity and Pension plans service tax (including Education Cess and HSEC) shall be charged @3.09% on new business premium (i.e. first year and single) and 1.545% on the renewal premium.

Kindly note the below mentioned points:

• Service tax shall be payable by the policyholder on the additional /top up/extra premium as per the rates defined for type of plans mentioned above. 
• Service tax collected on premium shall be refunded to the policyholder on cancellation during the cooling off period.
• Service tax calculated @12.36% on mortality charges, proportionate risk premium, accident disability rider, cooling off charges, if any shall be recovered from the policyholder on cancellation of the policy during the cooling off period.

• Service tax and the rate of service tax is applicable as per the amendments in Service tax laws from time to time.

The above mentioned service tax provisions are applicable whole of India except Jammu and Kashmir.

Yours faithfully,

Executive Director (F&A)

Finance & Accounts Department – Central Office, ‘Yogakshema’, Jeevan Bima Marg, P.B.No.19953, Mumbai