Value of supply of services in relation to life insurance :
The value of supply of services in relation to life insurance business shall be:
(a) the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such amount is intimated to the policy holder at the time of supply of service
(b) in case of single premium annuity policies other than (a), ten per cent of single premium charged from the policy holder; or
(c) in all other cases, twenty five per cent of the premium charged from the policy holder in the first year and twelve and a half per cent of the premium charged from policy holder in subsequent years – rule 6(4) of Valuation Rules.
Tax on entire premium if the policy is only to cover the risk – Nothing contained in this sub-rule shall apply where the entire premium paid by the policy holder is only towards the risk cover in life insurance. In that case, GST is payable on entire premium amount [as such policy does not have any investment portion. It has only risk portion].