Now, insurers, agents and brokers have to pay service tax on the services such as registration, licenses from IRDA
IRDA has asked insurance companies, agents and brokers to pay service tax with effect from January 1, 2014. However, business correspondent of insurance companies operating in rural areas have been exempted from paying service tax.
Apart from this, the insurance regulator will also get service tax from TPAs, insurance repositories, web aggregators, referral entities and surveyors.
Service tax is a tax levied by the government on service providers on certain service transactions. IRDA provides services like grant of registration, licenses, renewals, etc.
Earlier, service tax was only levied on a specified list of services. The finance ministry has now extended the purview of service tax through a Finance Bill 2012 tabled during annual budget 2012.
Through a circular, the insurance regulator said, “Attention is drawn to the Finance Bill, 2012 by which provision service tax is applicable to services provided by IRDA in the grant of registration, licenses, renewals etc. to the regulated entities in the insurance sector. Accordingly, IRDA is required to collect service tax from its service receiver i.e. insurance companies, TPAs, agents, brokers, insurance repositories, web aggregators, referral entities and surveyors. The authority in its 81st meeting held on December 31, 2013 has approved for collection of applicable service on the services rendered by the IRDA to above service receivers, with effect from January 1, 2013.”