Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: VAT RATES :: empanelment :: form 3cd :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: cpt :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: TDS :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4%
 
 
« News Headlines »
 Directions under section 119 of the Income-tax Act, 1961
 Securities excluded from GST ambit in revised Bill
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful

Non-life insurance firms may get full tax credit
November, 01st 2006

The cost of non-life insurance policies may come down as the government is set to allow firms providing both taxable and exempt insurance services to take input tax credit proportionate to the taxable services they render.

Currently, irrespective of the share of taxable services in a firms portfolio, input tax credit in such cases is capped at 20%. The balance service tax obligation is discharged through cash payment. The practice has resulted in large accumulation of unutilised credit with insurance majors, inflating, in many cases, the cost of policies to the consumer.

Private non-life insurers ICICI Prudential, Bajaj Allianz, Birla Sunlife, ICICI Lombard and Tata AIG and public sector LIC and New India Assurance will benefit from the finance ministrys move to accord them full input tax credit facility.

According to official sources, the insurance firms will have to segregate accounts in regard to inputs going into taxable and exempt services for full input tax credit. Of course, to a large extent, it is a matter of procedure whether the tax is paid through credit or cash. The insurer is anyway free to transfer the burden to the consumer either as cost or as tax incurred, as the case may be.

However, it is reckoned that a reduction in tax paid through cash will lend the industry extra liquidity which, in turn, will enable it to cut prices to push volumes, looking at long-term rewards. The domestic non-life insurance segment reported a size of $4.4bn in 05-06, up 16% over $3.8bn the year before, thanks to robust growth in automobile and health insurance segments.

Indeed, non-taxable non-life insurance services are few as compared to taxable services. Exempt services accounted for just 10-30% of the basket of non-life insurance products unveiled by insurance majors. The government had randomly estimated that any credit demand in excess of 20% of the tax liability of a non-life insurance firm would be attributable to input taxes that had actually gone into an exempt service.

The input services of the insurance industry could include telecom, advertising, courier services.

In the case of the excise duty, clearance of exempted goods from a factory which produces taxable goods also is allowed on payment of 10% of the value of the goods in lieu of input credit.

Officials said that while the number of excise-exempt goods are limited, there are still a large number of services that go as input services to goods or value added (exempt) services.
This, they said, was one reason for imposing curbs on the use of credit in such cases, in addition to practical difficulty in accounting.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Custom Software Development Outsourcing Custom Software Development Offshore Cus

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions