Service tax paid on insurance
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
---
### 🔴 **No CENVAT Credit on Life Insurance Premium for Proprietor**
As per **CENVAT Credit Rules, 2004**, credit of service tax paid on **life insurance services** is **allowed only when it is used for providing output taxable services** or **used in the course of business**.
However, **proprietor’s personal life insurance** is treated as a **personal expense**, **not a business expense**, and thus:
> ✅ **You CANNOT claim CENVAT credit** of service tax paid on it — even if:
>
> * The policy mentions service tax amount and registration number.
> * It's paid from the firm's account.
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### 📌 Relevant Reference:
Rule 2(l) of the **CENVAT Credit Rules** excludes **services used primarily for personal use or consumption of any employee**. Life insurance for the **proprietor** falls under this exclusion.
Even if the **firm’s name is used**, unless the policy is for employees as part of a group insurance plan (like Mediclaim under employee benefits), **credit is not allowed**.
---
### ✅ When Credit **is Allowed**:
* Group insurance taken for employees as part of employment benefits.
* Insurance used for risk coverage of assets used in providing taxable services.
---
### ⚠️ Conclusion:
* Life insurance of a **proprietor** is considered a **personal service**, not eligible for service tax credit.
* The **policy schedule alone is not sufficient** for credit unless it clearly shows:
* Billed in name of the **firm**,
* Used **exclusively** for providing output service (not applicable for personal life insurance).
---
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