Life Insurance Council (LIC), the official trade body of the domestic life insurers has expressed concern over the high level of taxation for the industry. The life insurance industry contributes large amounts to exchequer through direct taxes and service tax.

Last year, service tax was imposed on all charges collected by the industry under unit-linked scheme.

“The objective as enunciated by the finance minister was to create parity with mutual funds. Instead of creating parity, the reverse happened and the industry was loaded with heavy burden of service tax. On a unit linked insurance plans floated by mutual fund, a service tax of Rs 118 on a sum of Rs 1 lakh is payable whereas a similar scheme of life insurance company will attract a service tax liability of Rs 883. So much levy in terms of parity. This is a clear discrimination against the industry, said LIC in a note prepared by SB Mathur, secretary-general, LIC.