No Service Tax Leviable on Reminder Letters Issued for Insurance
Policies Premium to Policy Holders
[Service Tax Circular No.
166 dated 1st January 2013]
Subject: - Clarification in respect of
notices/ reminder letters issued for life insurance policies.
It has been represented by life insurance companies that in terms of
the practice followed, reminder notices/letters are being issued to the policy
holders to pay renewal premiums. Such reminder notices only solicit furtherance
of service which if accepted by policy holder by payment of premium results in
a service. Clarification has been
desired whether service tax needs to be paid on the basis of such reminders.
3. The
matter has been examined. Under the Point of Taxation Rules 2011, the point of
taxation generally is the date of issue of invoice or receipt of payment whichever
is earlier. The invoice mentioned refers to the invoices as issued under Rule
4A of the Service Tax Rules 1994. No tax point arises on account of such
reminders. Thus it is clarified that reminder letters/notices for insurance
policies not being invoices would not invite levy of service tax. In case of
issuance of any invoice, point of taxation shall accordingly be determined.
4. The
above clarification is issued only for life insurance sector.
5. Trade
Notice/Public Notice may be issued to the field formations accordingly.
F.No 354/190/2012- TRU