LIC Customers to Pay Service Tax

Hyderabad: If you are looking forward to wish a LIC policy purchaser a Happy New Year in January, think twice. Customers need to pay 3.9 per cent service tax per annum per policy. Until now LIC was paying the service tax of 3 per cent from the pool of money collected from investors. From January 1, 2014 however, service tax would be collected separately.

LIC would be discontinuing 34 policies and introduce new ones. The policy holders of these 34 policies however would be exempted from service tax but on any policy taken from January 1 they would have to pay a separate service tax.

Private insurers have been collecting service tax separately. Senior officials however say that by collecting service tax separately, LIC would be able to give higher bonuses. There is also a possibility that the premiums on LIC policies may come down marginally as mortality rates would now be revised.

S Sainath, a medical transcriptionist is distraught, he says, “I went to the LIC branch office in Paradise on Saturday to invest in Jeevan Surabhi plan but it was the last day of the sale of the plan. I’m not sure if LIC would offer as good as a plan as every three years we get back a certain per cent of the money.”