SERVICE TAX COMPOSITION SCHEME :
- Life Insurance Business : 3% of premium in the first year and 1.5% in other years ,if so opted instead of paying service tax at the rates specified in section 66B. However, such option shall not be available in cases of life insurance policies where the entire premium paid by the policy holder is only towards the risk cover like Pure term insurance plan of LICI.
Again, in respect of life insurance policies where the amount allocated for investment /savings is intimated to the policy holder at the time of making the policy ,service tax liability will be calculated as under-
Gross amount charged from a policy holder minus the amount allocated for investment or savings on behalf of policy holder shall be treated as value of taxable service.
- Air Travel Agent : 6% of the basic fare in case of domestic bookings and 1.2% of basic fare in case of international bookings ,if so opted instead of paying service tax at the normal rate of 14% as specified in section 66B. Option once exercised cannot be changed and shall apply uniformly in respect of all the bookings of passagefor travel by air made by the passenger.
- Promotion or Marketing etc.of Lottery : The distributor or the selling agent has the option to pay service tax as under ,if so opted instead of paying service tax at normal rate-
- Where the guaranteed prize payout is more than 80% , then @ Rs. 7000 on every Rs.10 lakhs or part thereof. ( Based on aggregate face value of lottery tickets printed.
- Where the guaranteed prize payout is less than 80% ,then @ Rs. 11000 on every Rs.10 lakhs or part thereof. ( Based on aggregate face value of lottery tickets printed.
Note – Aggregate face value in case of online lottery = Aggregate value of tickets sold.