INSURERS MAY HAVE TO ABSORB EXTRA SERVICE TAX

General Insurance companies will have to reckon paying extra service tax on premium if the rate is hiked mid-way during the tenure of a policy. Policyholders, in turn, could feel the pinch if the extra cost is passed on to them. In an order passed recently on Bajaj Allianz General Insurance, the Commissioner (Excise) struck down the company’s contention that it does not have to pay extra service tax, consequent to the hike in service tax rate. The case relates to Sept 04, when the rate was revised from 8% to 10%.