My car insurance renewal is due in some time and I was going through the previous receipt and started wondering why the service tax was charged on premium. A question came to my mind. Does the premium of any Insurance deserve service tax? All these days I believed that Premium is the amount which is designated for the sum assured. When is service tax applicable? I feel that service tax is applicable when someone provides us service in any form. In this case, service tax is applicable on complete Premium including PA covers and third Party liability. That means premium what I was being charged for is for service and actual premium value is nil for the sum assured.
I believe the government or finance department is fooling people by applying service tax on Insurance premiums whether it is personal, life or any form. You wonder how many vehicles are insured every year and how much is being collected throughout the year in the form of tax on premiums. I feel a pain to pay such tax and also feel hurt that the government is generating revenue on taxes on premiums from people. I wonder why people are not coming forward to fight against such taxes. There are many commerce graduates, finance consultants, educated people who can raise their opinion against it.
Being a common man, I personally wish that service tax must be waived off from Insurance Premiums, or a value must be formed while deciding the premium, which should be termed as service charge and service tax should be applicable on service charges. At some point of time, I feel we are still living under the English Empire. I hope we all have watched the movie Lagaan in which the English extracted taxes in any form from lay people in those days. I believe we are not living in the same age. Everyone has to come forward to fight against such service taxes.
