There are different kinds of life insurance plans
Some are purely life insurance and some have some investment cum life insurance.
Customer pays Insurance company directly and Insurance agent gets commission on it from Insurance Company
Service tax is applicable on this commission amount as follows
In case purely life insurance(no investment component)
No service tax is applicable
In case insurance is investment cum life
Here there can be 2 cases
Amount of premium which is payable for life and that payable for insurance is separately intimated to policy holder by Insurance Company
Service tax is applicable on investment component only, not applicable on life ins component
Amount of premium which is payable for life and that payable for insurance is not separately intimated to policy holder by Insurance Company
Service tax is payable
@ 3.5% of gross premium charged in first year and 1.75% during next year
(NEW RATE FROM 1.6.15)
(Earlier,the rates were @ 3% of gross premium charged in first year and 1.5% during next year)
Note:- There is reverse charge also on insurance company, hence service tax is payable by insurance company.
