Dear MR Deeipauk,
We wish to inform you that w.e.f. 1st April 2012, the service tax rate is revised from 1.55% to 3.09% for 1st year premiums and the existing rate of 1.55% will continue to be charged for renewal premiums (other than 1st year premiums).
Service Tax on riders is revised from 10.30% to 12.36% (to be mentioned in case of riders only). As a result of this, the total amount due and payable to the Company has been revised.
Service tax is an indirect tax levied on certain types of services specified by the Government. Life insurance service is defined as the service of providing risk cover. Service tax is borne by the recipient of the service and in a life insurance contract, as the recipient is the Policyholder, he/ she is required to bear the service tax.
We also wish to inform you that service tax is not an income to the company or part of the premium. The same is levied on the premium/ charges at the rates applicable, which is passed on to the Government. This is based on the principle of Indirect Taxation.
Hence, the revised premium is due to the revision in the service tax rates.
We hope the above explanation addresses your concern.