As the GST rollout plans gathers momentum, life insurers sought exemption from the new taxation regime on premium income, while general insurers have demanded differential rates for their products.
Life insurers, who are set to write to the Prime Minister seeking exemption from the new tax regime, feel that their premium income has remained stagnant since the industry was brought under service tax in 2012.
Since life insurers are passing on service tax to customers, it has impacted their premium income growth which has been stagnant since then. The present service tax rate is 14.5 per cent and 0.5 per cent ‘Swachh Bharat’ cess.
A resolution to this effect was passed during the annual general meeting of the Life Insurance Council held here on September 16.
The demand comes as the first two-day GST Council meeting that ended on Friday in the National Capital, decided to meet on October 17-19 to finalise the maximum and minimum rates in the single national taxation regime.
Finance Minister Arun Jaitley has been repeatedly calling for ending tax exemptions to have lower GST rates as exemptions are forcing the government to impose higher rate of tax on other taxable items/sectors.
The Life Insurance Council, which is the umbrella body of 24 life insurers, is all set to write to the Prime minister in this regard shortly, as their representations to the finance ministry in the past have not been successful, a senior council executive said.
“Life insurers’ new business premium has remained stagnant at around Rs 1.25 trillion per annum since 2012 after the service tax was imposed by the government on premium income. This is in spite of the fact that earning capacity of the people has been constantly increasing,” Life Insurance Council secretary V Manickam told PTI.
“We have to pass it on to customers and they don’t find investing in insurance attractive anymore,” he added.