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Impact of Service Tax rate increase on Life Insurance policies

As we know, Govt of India has raised the service tax rate from 14.0% to 14.5% with effect from 15th November. If you had purchased a life insurance policy with any insurer post December 2013, you would be paying a service tax along with your policy premium. The service tax rate on term and health insurance policies was 14% earlier. Now, you have to pay 14.5% service tax for these plans. so your service tax part would have raised a little. With the traditional plans, service tax was collected at a rate of 3.5% of the premium for the first year and 1.75% from the second year onwards. Now, this service tax would be 3.625% for the first year premium and 1.8125% from the second year onwards.




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