2 LIC policies out of tax ambit, states to save money

In a move that will help state governments save money, the government has exempted two Life Insurance Corporation policies from service tax. HT reports.

In a move that will help state governments save money, the government has exempted two Life Insurance Corporation policies from service tax.

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The Aam Aadmi Bima Yojna (AABY) and Janashree Bima Yojna (JBY) will no longer attract service tax, a finance ministry notification issued said on Monday.

In case of both the policies, the annual premium payable per person is Rs.200 — of which 50% is paid by the Central government and the remaining by the state to which the policyholder belongs.

“With the exemption of service tax, the government will be able to save some money,” a service tax department official said.

The AABY covers death and disability insurance for the benefit of rural landless households. It provides insurance against natural as well as accidental and partial or permanent disability.

A person availing the benefit of this policy has to be either the head of the family or an earning member of the family of rural landless households, and should be between 18 to 59 years.

The JBY provides life insurance protection to below poverty line families and those marginally above the poverty line.