The life insurance industry has made a representation for the service tax on fund management charges to be abolished to offer a level-playing field to all the financial service companies. The representation is being made to the finance ministry by the life insurance council an industry association of life companies.
Kotak Life Insurance MD Gaurang Shah said: The asset management companies dont pay any service tax on fund management charges. Similarly, even banks dont pay a tax on the net interest margin (NIM). Hence, we have requested the council to broach the finance ministry on this issue. The idea is to have a uniform tax structure for similar financial products and services.
In the meanwhile, Kotak Life Insurance announced its financial results on Tuesday. It has reported a net profit of Rs 18.52 crore for the October-December quarter in 2009.
For the nine months ended December 2009, the net profit stood at Rs 33.9 crore compared with a loss of Rs 25.3 crore for the corresponding period of the previous fiscal.
The company has been able to improve its profit performance substantially and make profit due to lower new business strain and cost reduction on the back of calibrated expansion, Mr Shah added. The individual New Business Premium grew by 22% to Rs 299.3 crore and the renewal income jumped by 59% to Rs 372 crore in the reporting quarter.
The companys commission cost lowered by 21% to Rs 370 crore in April December 2009 against Rs 450 crore. In order to lower distribution costs, the life insurer is mulling over the idea to launch an online term plan, ULIP and a pension plan. The benefit of the lower cost of distribution would be passed onto customers in terms of softer premiums.