State owned Life Insurance Corporation of India (LIC) has issued a letter in which it has clarified that NRIs will not be required to pay service tax on life insurance premiums.
To avail this benefit, agents will have to submit a declaration form along with the supporting documents of NRI clients.
“The Corporation has started collecting service tax on premium from the policyholders including NRIs on all the new policies issued from 01.01.2014. However, the service tax provisions state that if the NRI (service recipient) is located outside India, then in that case the service tax cannot be levied on the premium income received from the NRIs. In view of the provisions of the service tax act, the Competent Authority has approved the procedure to be followed by the corporation for its NRI clients. In accordance to the regulation LIC shall provide service tax exemption to the NRI policyholders after obtaining the necessary address proof from them,” states the letter issued by Finance and Accounts Department of LIC of India.
A Mumbai based insurance advisor told Cafemutual that LIC was charging service tax on NRIs on insurance premium due to lack of clarification from Central Board of Excise and Customs (CBEC).
LIC has the highest number of NRI clients, say distributors. It has offices in Mauritius, UK, Fiji, Bahrain, Nepal, Sri Lanka and Kenya.
