No service tax on Bima Yojana insurance schemes
26 December 2012
The government has extended service tax exemption to two life insurance products, the Aam Aadmi Bima Yojana (AABY) and the Janashree Bima Yojana (JBY).
Launched in August 2007, the AABY covers death and disability insurance for rural landless households. It provides insurance for the head of the family or earning member of the family of such households between the ages of 18 and 59 years against natural death or accidental death, as well as partial or permanent disability.
The annual premium is Rs200, of which 50 per cent is payable by the union government and the remaining 50 per cent by the respective state government.
The centre has created a fund that is being operated by the Life Insurance Corp (LIC) for meeting the liability of the central government towards premium payment.
AABY also provides for educational assistance to the beneficiaries' children studying from 9th to 12th standard as an extended benefit. A separate fund has been created for providing scholarship to the children of beneficiaries.
The other exempted fund, JBY, was launched in August 2000. It provides life insurance protection to people who are below the poverty line or marginally above the poverty line.
Persons aged between 18 years and 59 years and who are members of the identified 45 occupational groups are eligible to be covered under the scheme.
The premium for the JBY is Rs200 per member. While 50 per cent of this is met out of the Social Security Fund maintained by LIC, the balance 50 per cent premium is borne by the member and/or nodal agency.