LIC staff seek withdrawal of GST on insurance policies

LIC staff seek withdrawal of GST on insurance policies

The LIC Employees Union has sent a mass petition to the Prime Minister demanding withdrawal of 18% GST on insurance policies and related services.

In their submission to the Prime Minister, the employees said the insurance industry had been heavily hit by the increase in tax rate from the earlier 15%.

“The rate has already undergone a steep hike in the past three years from 12.36% to 15 %. This causes deep concern as it is applicable to health insurance and individual lives covered under the group insurance schemes and risk component of premium of all life insurance policies,” the union said.

In general insurance, under GST, the rate for third-party insurance and vehicles of common man has been increased to 18%.

The GST has brought areas hither to untaxed under the tax regime. Service charges payable for nominations, assignments, and issuance of duplicate policies are brought under the 18% GST bracket now.

There had been no tax on late fees so far. Since the late fee itself was a penalty, it was not justifiable in penalising the policy-holders by levying tax on that, it noted.

The union said the increased GST would affect insurance penetration among common man.

“The LIC of India has been in the forefront providing funds to the infrastructure needs of this country and its contribution to Railways is an example. For the 12th five-year plan (2012-17) LIC has contributed more than Rs. 14 lakh crore for many sectors, including roads, electricity, basic infrastructure and so on. This GST regime, we feared, would affect the fund mobilisation for such nation-building activities.”

Source :  The Hindu


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