GIC asks to keep premiums out of service tax netThe General Insurance Council (GIC), the representative body of non-life insurance insurers, has proposed that health insurance premiums and premiums below Rs 2,500 for non-health insurance polices should be out of the service tax net.
Apnainsurance.com Research Bureau
02 Jan 2008
General Insurance Council (GIC), the representative body of non-life insurance
insurers, has proposed that health insurance premiums and premiums below Rs
2,500 for non-health insurance polices should be out of the service tax net.
Reported in the Economic Times, GIC general secretary Mr. K. N. Bhandari said, "The
council, in its pre-budget memorandum to the Finance ministry, has sought
service tax exemption for health insurance premiums. We have also requested the
ministry for a service tax waiver on covers other than health insurance,
premiums for which are below Rs. 2,500."
Currently, health cover premiums are taxed at
12.5%. Non-health premiums above Rs 50 are also taxed at the same rate. The
council feels that service tax exemption on health cover premiums will result
in more health cover penetration among the population.
As per a notification back in 1994, premiums below Rs 50, excepting motor insurance premiums are exempted from service tax. According to Mr. Bhandari, "This threshold has not been revised since then. The government is propagating the need for insurance and there is a constant endeavor to maximize penetration. Hence, we have requested the Finance ministry to increase this threshold limit to at least Rs 1,000 since individuals who pay premiums of less than Rs 1,000 are mostly from the lower segment for whom even payment of premium is a challenge. A Rs. 2,500 threshold would be desirable."