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: articles on VAT and GST in India :: cpt :: VAT Audit :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: empanelment :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: ACCOUNTING STANDARD
 
 
« Service Tax »
 India’s E-Service Tax Will Add To Foreign Content Providers’ Woes
 GST Council to discuss model laws, tax jurisdiction today
 Tax Invoice Under GST
 Insurance may fall under 12% tax slab in GST, from 14% service tax currently
 GST draft makes it must for companies to pass tax benefit to consumers
 To speed passage, Government plans GST Bills as money Bills
 No service tax on train tickets booked through IRCTC till December 31
 GST Council meet postponed to December
 Banks integrating systems with RBI, GST Network to collect tax: Arun Jaitleya
 Service tax waived for online train ticket booking till Dec 31
 Key challenges in implementation of Goods and Services Tax

With increase in service tax, ULIPs to get costlier
March, 02nd 2011

The proposed increase in the service tax on life insurance products will make both traditional and unit-linked insurance plans, or Ulips, more expensive. The industry expects the costs to go up by 50-75 basis points (one bps = 0.01%).

Although companies are yet to figure out the impact of the proposed increase, most insurance executives said premiums may go up by as much as 75 basis points.

"Policies are going to get costlier with the increase in service tax. While traditional plans will cost nearly 50 basis points more, Ulips may see a 75 basis points increase," said SB Mathur, secretary general, Life Insurance Council.

The budget for FY12 has proposed a 50% increase in service tax for traditional plans - where investments from the premium collected are made as per the regulatory guidelines. Currently, policyholders of traditional endowment or moneyback plans need to pay 1% of the total premium as service charge.

In Ulips, where the policyholder chooses the investment mix (how much to put in equity or debt), the service tax will be charged on the portion of the premium not allocated for investment, like premium allocation and policy administration charges. At present, the service tax is only on mortality and fund management charges.

"This taxing of the allocation charges and policy administration charges will affect the yield, and we envisage at least 20-25 bps reduction in yield for the policyholder," said G Srinivasan, CFO, Bharti Axa Life Insurance.

A senior executive of a life insurance company said efforts made by the Insurance Regulatory and Development Authority, or Irda, to increase the returns for policyholders by capping the charge will get neutralised to an extent.

Insurers, however, are not clear whether the service tax will be part of the 3% cap on the total charges.

Last year, Irda had put a cap on various charges, including surrender and fund management charges. The difference between the gross and the net yield is capped at 3% for policies with less than 10 years of maturity; for policies with a maturity of more than 10 years, the difference is capped at 2.25%.

P Nandagopal, managing director of India First Life Insurance, said there is no clarity on whether the service tax will come under the charges prescribed for Ulips. "In case it is outside the 3% cap, the premium will go up for policyholders. If it is within the prescribed cap, insurers will have to control expenses well."

"The increase in service tax will increase the cost of insurance for policyholders," said GV Nageswara Rao, managing director and CEO of IDBI Federal Life Insurance Company.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

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