Revised Negative List of Services

Dated:18^th November 2011

The Central Board of Excise & Custom has issued Revised Concept Paper on the “Taxation of Services Based on a Negative List”. The Negative List of Service as revised is stated here:

Revised Negative List of Services

Sector	S. No.	Negative List
1. By specified persons	1.	All services other than notified services provided by government Proposed notified services: 1. Business promotion or business support services 2. Construction/works contract 3. Insurance services 4. Port or airport services 5. Postal services other than under Universal Service Obligations (post card, inland letter and money order) 6. Renting of an immovable property or right to enter or use an immovable property 7. Security 8. Trade fairs and exhibitions 9. Transport of goods and passengers 10. Warehousing
	2.	Services by international bodies and diplomatic missions under diplomatic and consular arrangements as per laid down conditions
2. Social welfare and public utilities	3.	Services by organizations registered as non-profit entities under the Income Tax Act 1961 (DTC 2012) in matters relating to public and social welfare activities substantially at or below the costs (excluding health & education)
	4.	Funeral, burial, crematorium and mortuary services
3. Financial Sector	5.	Sale, purchase or acquisition of securities, debts, mutual funds and actionable claims on principal-to-principal basis excluding (1)services in relation to such transactions and (2) when acquired in lieu of a service
	6.	Interest or discount on cheques, promissory notes, bills of exchange or debt instruments
	7.	Dividend on investments
	8.	Sale and purchase of foreign currency amongst banks and/or authorized dealers of foreign exchange
4.Transport	9	Transport of passengers with accompanied belongings by: (a) Non-AC second class of passenger travel by railway and any class by metro and mono-rail; (b) Public transport buses on a point-to-point basis (except tourist buses) and stage-carriage basis; (c)  Public transport in ship or vessel of less than 15 net tonnage on a point-to-point basis (except tourist purposes); (d)  Metered cabs or three-wheeler auto-rickshaw
5. Construction & Real Estate	10	Construction, works-contract, repair, alteration, renovation or restoration of: (a) Specified infrastructure for larger public good; (b) Residential building comprising a single dwelling unit
	11	Renting of personal dwellings in excess of Rs 1 lakh per month per dwelling
6. Education	12	Pre-school, school and recognized education** and vocational training recognized by NCVT except placement services and donations or similar charges in relation to admission
7. Health	13	Services by clinical establishments except in relation to health & fitness, weight reduction programmes, health check-up and cosmetic or plastic surgery;
8. Others	14	Copyright services of original literary, dramatic, musical and artistic works.
	15	Services provided by independent journalists, PTI & UNI for providing news
	16	Services provided by sportspersons, as a player, coach or referee/umpire and performing artists in that capacity (excluding as brand ambassadors)
	17	Services provided by a trade union to its members
	18	Representational services provided by an advocate to individuals
	19	Services to own members by an exempt entity by way of reimbursement of charges
	20	Tolls except services in relation to collection of tolls
	21	Betting and gambling except services in relation to promoting, marketing or organizing games of chance, including lottery services
	22	Advertisements other than advertisements published in newspapers or broadcast by radio or TV or displayed in other electronic media

*Government means the Union, State and local self government and government regulatory bodies established under an act but shall not include any other entity established under the Companies Act 1956 or any other law for the time being in force.

**Recognized education means education leading to the award of a certificate or degree recognized by a body established by an Indian law.

Nalin Bhandari
Chartered Accountant
Cell:+919930018666

Types of Banking Product in India

Saving Bank Account:

A Savings bank account is the operating account for individuals and others for non-commercial transactions. A Savings account helps the account holder to do day-to-day banking transaction. The account holder also earns interest on the balance lying in this account.

General Features of Saving Bank Account:

·         Mode of Operation: Single and/or Jointly

·         Minimum Balance: Mostly Required. In case of Salary Account, minimum balance is generally waived.

·         Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking, ATM, Debit Card.

·         Nomination Facility: Yes

·         Earned Interest: Yes. Interest rate p.a. is 3.5% to 6%

·         No. of transactions in a month: Generally number of withdrawal and deposits are restricted. Charges are applicable on any transactions beyond the restricted number.

·         Account Maintenance Charges : No

Current Bank Account

A Current bank account is the operating account for commercial transactions. A Current account helps the account holder to do day-to-day banking transaction generally without any restrictions. As these accounts are commercial in nature & considering the large number of transactions in the account and volatile nature of balances maintained overnight banks generally levy certain service charges for operating a Current account.

General Features of Current Bank Account:

·         Mode of Operation: Businesses

·         Minimum Balance: Mostly Required. Banks generally insist on a higher minimum balance to be maintained in current account.

·         Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking.

·         Nomination Facility: No

·         Earned Interest: No

·         No. of transactions in a month: Generally number of withdrawal and deposits are unrestricted.

·         Account Maintenance Charges : Yes

Fixed Deposit Account

As the name suggests, Fixed Deposit Account are term deposit accounts. The interest rate, amount of fixed deposit & tenure is agreed and decided at the time of opening of Fixed Deposit Account. The duration of Fixed Deposit is min 15 days to 10 yrs. Generally, penalty is levied for premature encashment of deposits.

General Features of Fixed Deposit Account:

·         Mode of Operation: Individual as well as Businesses

·         Minimum Balance: Not Applicable

·         Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking.

·         Nomination Facility: Yes

·         Earned Interest: Yes. Higher interest rate than Saving Account.

·         No. of transactions in a month: Not Applicable

·         Account Maintenance Charges : No

Recurring Deposit Account

Recurring Deposit Account are also term deposit accounts but are different from Fixed Deposit Account. In case of recurring deposit account, the depositor can do multiple deposits unlike the fixed deposit where in each deposit is treated as new Fixed Deposit. The interest rate, amount of fixed deposit & tenure is agreed and decided at the time of opening of Recurring Deposit Account. The duration of recurring deposit is min 6 months to 10 yrs. Generally, penalty is levied for premature encashment of deposits.

General Features of Recurring Deposit Account:

·         Mode of Operation: Individual as well as Businesses

·         Minimum Balance: Not Applicable

·         Mode of Transactions: Cheque, Cash, Internet Banking, Mobile Banking.

·         Nomination Facility: Yes

·         Earned Interest: Yes. Higher interest rate than Saving Account.

·         No. of transactions in a month: Not Applicable

·         Account Maintenance Charges : No

Nalin Bhandari

Chartered Accountant

Cell:+919930018666

Types of Insurance Products & its comparison

Following are the products generally offered by Life Insurance Companies in India. The detailed description of each product, its feature and significance is described in this blog. Each product serve the specific purpose. Although there could be other products also but feature of all the product would be more or less the same as shown in this blog.

1.       Pure Term Products : Pure term products are pure risk products & have no maturity benefits. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policy normally expires without any benefit becoming payable

Other Feature are as follows:

·         Premium Payment  Mode : Single/Monthly/Quarterly/Half Yearly/Annually

·         Term of Insurance: 1 yr to 35 yrs

·         Minimum/Maximum Age at Entry: 18 yrs/70 yrs

·         Death Benefit: Yes

·         Maturity Benefit: No

·         Surrender: Generally in case of Single Premium

·         Sum Assured: As per Underwriting Rules

·         Rider Available :Yes

·         Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

·         Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

2.       Term Products with Return of Premium: These products are pure risk products. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get refund of all the premium paid during the policy term

Other Feature are as follows:

·         Premium Payment  Mode : Single/Monthly/Quarterly/Half Yearly/Annually

·         Term of Insurance: 1 yr to 35 yrs

·         Minimum/Maximum Age at Entry: 18 yrs/70 yrs

·         Death Benefit: Yes

·         Maturity Benefit: Return of Premium paid.

·         Surrender: Yes

·         Sum Assured: As per Underwriting Rules

·         Rider Available :Yes

·         Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

·         Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

3.       Endownment Proucts: These products are risk plus investment products. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get sum assured and bonus, if any

Other Feature are as follows:

·         Premium Payment  Mode : Single/Monthly/Quarterly/Half Yearly/Annually

·         Term of Insurance: 5 yr to 35 yrs

·         Minimum/Maximum Age at Entry: 18 yrs/70 yrs

·         Death Benefit: Yes

·         Maturity Benefit: Yes

·         Surrender: Yes

·         Sum Assured: As per Underwriting Rules

·         Rider Available :Yes

·         Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

·         Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

4.       Money Back Plans: These products are risk plus investment products. In Money Back plan, Generally certain percentage of sum assured is return at the end of each pre-decided period. In case of Death, the sum assured reduced by amount already paid is payable to legal heirs of policyholder. For E.g Sum Assured :Rs. 3 Lakh ,Money Back : After every 5 yrs @ 20%,Policy Term:20 yrs

So Benefit is payable as follows:

5^th Year: Rs. 60,000 (i.e. 20% of 3 Lakh)

10^th Year: Rs. 60,000 (i.e. 20% of 3 Lakh)

15^th Year: Rs. 60,000 (i.e. 20% of 3 Lakh)

20^th Year: Rs 120,000 plus bonus if any.

Suppose life insured dies during 8^th year of policy then his legal heir will get Rs. 240,000 (Rs. 3 lakh reduce by Rs. 60,000 already paid at the end of 5^th year)

Other Feature are as follows:

·         Premium Payment  Mode : Single/Monthly/Quarterly/Half Yearly/Annually

·         Term of Insurance: 5 yr to 35 yrs

·         Minimum/Maximum Age at Entry: 18 yrs/70 yrs

·         Death Benefit: Yes

·         Maturity Benefit: Yes

·         Surrender: Yes

·         Sum Assured: As per Underwriting Rules

·         Rider Available :Yes

·         Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

·         Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

5.       Children Plans: These products are risk plus investment products. The intention of this product is to support the Child education/marriage in case of sudden death of Insured person (normally Father). In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get sum assured and bonus, if any. These plan also have feature under which future premium is waived off.

For E.g.

Life Insured	Sum Assured	Premium	Policy Year	Death in
Father	300,000	10,000 p.a	20 Yrs	6th Year

Policy Feature is say: At the time of Death Child will get Sum Assured plus future premium will be waived off plus additional sum assured at the end of policy term.

So on 6^th year child will get Rs. 300,000 & policy will remain in force.

Future premium will be waived off i.e future premium of Rs 140,000 is not payable(14*10,000)

At the end of 20^th year, child will again receive Rs 300,000.

Other Feature are as follows:

·         Premium Payment  Mode : Single/Monthly/Quarterly/Half Yearly/Annually

·         Term of Insurance: 5 yr to 35 yrs

·         Minimum/Maximum Age at Entry: 18 yrs/70 yrs

·         Death Benefit: Yes

·         Maturity Benefit: Yes

·         Surrender: Yes

·         Sum Assured: As per Underwriting Rules

·         Rider Available :Yes

·         Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

·         Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available

6.       ULIP Products: These products are risk plus investment products. The investment component in premium is invested in equity and/or debt securities. The policyholder is given the option to select different type of fund. In Case, the person (whose life is insured) dies during the term, the benefits equivalent to Sum Assured or Fund Value whichever is higher are payable under the policy and in case of his survival till the end of the selected term the policyholder normally get amount equivalent to Fund Value.

Other Feature are as follows:

·         Premium Payment  Mode : Single/Monthly/Quarterly/Half Yearly/Annually

·         Term of Insurance: 5 yr to 35 yrs

·         Minimum/Maximum Age at Entry: 18 yrs/70 yrs

·         Death Benefit: Yes

·         Maturity Benefit: Yes

·         Surrender: Yes after 5 years

·         Sum Assured: As per Underwriting Rules. Min Sum Assured is 5 times of Annual Premium

·         Rider Available :Yes

·         Tax Benefit on Premium Paid :Section 80C (IT ACT,1961) is available

·         Tax Benefit on Death/Maturity: Section 10(10D) (IT ACT,1961) is available