Micro insurance may be let off from service tax

With the Union Budget just round the corner, micro insurance may be in for some good news. The government is planning to exempt micro insurance products from the service tax net.Microinsurance products are basically small premium policies that range between Rs. 5,000 to Rs. 50,000. They are subject to much more liberal norms and are targeted to the underprivileged and lower income groups.The service tax imposed at present is 12.24% and the revenue generated from it is growing at over 60%. The premiums of micro insurance products are small and taxing it would mean more cash outgo from the insured’s pocket, who comprise of potters, farmers, craftsmen from the lower income groups.However, broadly speaking, micro insurance exposes insurance companies to good opportunities in terms of excellent growth prospect.