10.5 % service tax on PLI policies imposed by JK government:-
Jammu, Nov 25: The Jammu and Kashmir government’s move to
impose a uniform 10.5 percent service tax on the insurance policies has evoked
strong resentment among the policy holders of Postal department terming it as
cutting on their hard earned savings.
Sources said
that state Commercial Tax Department has imposed a uniform service tax of 10.55
per cent on the insurance policies offered by all insurance companies including
the Indian Postal Department Insurance schemes.
In this
regard the department of Posts India has recently issued a notification to
inform the public that every insurance service, including Postal Life Insurance
and Rural Postal Life Insurance have been brought under sales tax net with
effect from April 2007 vide under Jammu and Kashmir Government SRO No 117 dated
March 2007.
The Posts
India Department notification further says that all the existing and
prospective Postal Life Insurance and Rural Postal Life Insurance insurants
shall be charged 10.5 percent tax on the premium amount w.e.f from Nov 2013
payable to the state Government.
Sources said
that around two lakh policy holders of Postal Life Insurance (PLI) and Rural
Postal Life Insurance (RPLI) in the State have been affected by the new tax
regime.
They said the
imposition of such high rates of service tax would nibble at PLI and RPLI
holders’ savings and benefits, adding that it would not affect much to the
insurance policy holders of other companies which offer huge returns and high
premium and long drawn Life Insurance policies and were already charging
service and other taxes by including these in the premium itself.
Pertinently,
only 1 to 3 percent tax has been imposed in other states after Insurance
Regulatory and Development Authority (IRDA) issued a directive in this regard
in June this year.
“It is highly
illogical to impose service tax on the Postal Department Insurance schemes
which offer a very low return of seven percent on small premium policies.
It means that
if a PLI policy holder pays 10.55 percent service tax on the premium it is
losing the seven percent returns and also paying 3.50 percent from his own
pocket”, an Indian Postal Service official said on condition of anonymity.
Astonishingly,
while the IRDA has asked the state governments to impose up to 3 percent
service tax, Jammu and Kashmir
has imposed 10.55 percent much to the dismay of the policy holders,
particularly those having policies of Indian Postal Service Insurance schemes.
“Indian
Postal department offers PLI only to employees of central and state government
departments, nationalised banks, officers and staff of the defence services
besides RPIL to the poor people of backward areas where they don’t have other
options of saving, on very marginal interest, which is even less than the
amount they are being forced to pay as service tax,” the official said.
He termed the
imposition of service tax on the premium of PLI and RPLI as a dig at the policy
holder who are government servants and pay every tax in one way or other.
“The
department made several requests to state government for exempting PLI and RPLI
from the new tax policy but they paid no heed,” the official said.
He claimed
that the Postal department also requested for reducing the tax rate from 10.55
per cent to 1 or 2 per cent like other states but that was also declined by
finance department, adding “after getting disappointed by the attitude of state
government India Post take up the matter with higher ups in Union Government.”
When
contacted, Chandera Parkesh, Chief Post Master General J&K said, “Service
tax on PLI and RPLI is the decision of state government. After receiving
complaints from the customers regarding sudden increase in premium amount we
have sent a representation to state finance department seeking waive off.”
He said the
Directorate of Postal Service is also in touch with state government on the
issue.
However, a
senior officer in state finance department, on condition of anonymity, told
Greater Kashmir that concerned minister is not
in town and on his return the Postal department representation will be tabled
for discussion. Source: http://www.greaterkashmir.com
