The finance ministry on Monday dropped service tax on Aam Aadmi Bima Yojna (AABY) and Janashree Bima Yojna (JBY) and this will save the government some money as the central contribution towards premium in the two schemes is 50% and the rest is contributed by state governments.

The AABY provides for insurance of the head of the family or an earning member of the family of rural landless households between the age of 18 to 59 years against natural death as well as accidental death and partial/permanent disability . The annual premium payable per member is Rs 200, of which 50% is paid by the central government and the remaining by the state government.