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increase in service tax

Increase in service tax on insurance premium from 01/06/2015

It was proposed in in Union Budget 2015 to increase the service tax from 12.36% to 14%. After the Notification No. 14/2015-Service tax dated 19/05/2015 by the government, new servic tax will be effective from 01/06/2015. All the Service including the insurance premium will be dearer from 01/06/2015. The special rates for life insurance service as per rule 6(7A) has been changed. The rate ofservice tax for FY 2015-16 are as under:

Recent Updates: Increase in Service tax on Insurance premium to 15%

New Service Tax rates

S. No. Particulars Existing rates (Upto 31/05/2015) Revised rates (From 01/06/2015)
A) On gross premium less amount is alloted for investment/savings, if such amount is intimated to the policy holder 12.36% 14%
B) Where the entire paid for risk cover 12.36% 14%
C) For all policies not covered under A) and B)
On First year premium 3.09% 3.50%
On subsequent premium 1.55% 1.75%

Life insurance service provided under Varishtha Pension Bima Yojana scheme has be exempted wef 01/04/2015.

18 thoughts to “Increase in service tax on insurance premium from 01/06/2015”

  1. I have purchased 2BHK flat in Pune. Agreement had been registered on 12March’2015 when the Service Tax was 3.09%. Also I paid few part payments. Its under construction and possession would be given by Feb’2016. Now from June’2015, Government increased service tax by 0.41 which make 3.50% S.T from June’2015 on-wards. My builder says I also need to pay the extra amount of 20K rupees as the S.T is increased. But do I need to pay service tax for the flat which i purchased in Feb’2015 and Agreement was done in 12March’2015?? Kindly update me.

  2. Hello
    My self Anjali, I want to ask that how much service tax i have to pay if my monthly LIC premium is rupees 8547 per month.

    1. It depends upon for what plan and which premium you are paying, If you are paying this premium for Term Plan or Health Insurance Plan (without any Maturity benefits) then service tax will be @14.50% every every (till the rate changes), if you are paying for any other policy, then in first year it will be @ 3.625% and from second year @1.8125%.

  3. Hello
    My self Santosh kumar, I want to ask that how much service tax i have to pay if my Three month LIC premium is rupees 4170+Service tax three month.

    1. Please read this post for latest rate tax to be paid on insurance premium: Swachh Bharat Cess On Insurance Premium

  4. I have taken life ensure policy before 1 Jun 2015 and paid first installment with 12.36 service tex. is same rate will applicable my remaining installment

  5. Hello
    I have LIC jivan mitra policy. And in my premium receipt service tax is 0. Policy is of 30 years. Why there is no service tax?

    1. Customer do not have to pay service tax on Policies which were taken before 01/01/2014 without any service tax.

  6. I have taken policy on 01/04/2014.service tax at that time was 3.09% for first Year & 1.545% for subsequent Premiums.
    What is service tax rate for premium due on dated 01/04/2016.Please clear the rate applicable as on purchased date or current date..

  7. Hi,
    Please can anyone provide me a new Service Tax Rate in LIC for 1st year Premium and for renewals.
    Please revert me.
    Thank You.

  8. My shelf elango I have new jevan anand 815 policy.my quarterly premium 14187.I want how much of tax I have to paid

    1. Total service tax on insurance premium is 15% (14% service tax + .5% Swachch Bharat Cess +.5% Krishi Kalyan Cess). There is no other tax on insurance premium.

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