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 RPLI 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
