Life insurance companies are set to be spared of paying service tax on fund management fees.
This is good news for policy holders investing in unit-linked insurance plans (Ulip) as they will not have to take a hit on their returns.
The Central Board for Excise & Customs (CBEC) has accepted the insurance regulator’s view that fund management fees should not attract service tax because managing a policy holder’s money is a part of an insurers business, said a government official.
Fund management fees are charges levied by an insurer to meet expenses incurred on managing investments in Ulips. The policy holder absorbs the cost as it is factored in the market value of Ulip investments
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