INDIA ASKED TO EXEMPT MICRO-INSURANCE FROM SERVICE TAX

report from the United Nations Development Programme prescribed that the Indian government should exempt micro-insurance from the payment of service tax, thus allowing greater penetration of the insurance sector in low income and rural areas. The report indicated that the service tax of 10.2% on premiums adds to the price of insurance. To help keep premiums low for rural poor, government could consider waiver of service tax on micro-insurance products for a limited period.

The author of the report Mr. Anuradha Rajivan stated that the micro-insurance sector could make business worth $2bn over the next two or three years, with more specialisation. He reported that insurance products developed for the urban population would not really work for their rural counterparts. They may need insurance for various other areas, like for a single tree or insurance against snake-bite, the things that affect them more frequently and directly.