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: TDS :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: empanelment :: VAT Audit :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company
 
 
Service Tax »
 More time sought for GST migration
 GDP may slow down if GST implemented in hurry: Tax officials
 Goods and Services Tax: Beyond audit & scrutiny, dual control still a grey area
 India to levy service tax on freight for imports on delivered basis
 Income tax relief must be blended with additional tax measures
 9th GST Council inks breakthrough on dual control over tax payers, rollout deferred to July 1, 2017
 GST rollout uncertainty hits Budget 2017 calculations
 GST now set for July 1 roll-out, dual control hurdle finally over
 Grant of Registration under DVAT and CST
 Do not raise service tax, says Chamber
 Excise, service taxpayers to migrate to GST portal by Jan 31

IRDA for 5-year freeze on ULIPs service tax
May, 31st 2008

The Insurance Regulatory Authority of India (IRDA) has sought a five-year freeze on service tax to be charged on life insurance companies that collect money from investors to manage their unit-linked insurance plans (ULIPS).

The regulator is understood to have sent a formal communication to the government to consider deferring the levy by at least five years on the ground that the industry needs more time to grow. A tax at this stage could also impact ULIPs investments, especially in a volatile stock market, said officials familiar with the development.

The move assumes significance as Parliament is slated to pass the finance bill early next week. In the bill, the government has proposed a 12% service tax on any amount charged by an insurer in relation to the management of investments under ULIPS. Normally, tax on new services comes into force after the finance bill gets the presidential nod. Back of the book calculations show that yield for ULIPs investors would drop by about 60 basis points, with a 12% service tax. Investors have to absorb this loss as insurance companies would pass on the burden to them.

 ULIPS are savings instruments which offer protection to the policy holder in terms of life cover and also flexibility in investments. These investments are akin to a mutual fund and the returns are reflected in the increase in the value of the unit, mirrored by the net asset value (roughly the market price) declared by the company. Mutual funds, for instance, charge loads that investors have to bear while buying or selling the units.

The load is charged over and above the NAV of the MF scheme. But entry and exit loads are exempt from service tax. Insurance companies also collect a host of charges including an allocation charge, policy administration charge, mortality charge, rider charge, fund management charge and surrender charge, among others.

What is perhaps not made clear to the investor is the fact that of every Rs 100 invested in the first year, a substantial portion goes towards commissions and other charges.

According to an insurance industry representative, the policy administration charge is comparable to the entry load of a mutual fund and surrender charge to the exit load. The ticket size for ULIPS is also smaller compared to a mutual fund. So, there is a case for exempting life companies from service tax, he said.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

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