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