Charging of S.Tax on earning through LIC

[Guest]

Sir,

I have a policy of 25 Lac for maintenance of my factory assets(machinery) and also paying premium.Before the policy expired I incurred loss to assets and received compensation as per insurance terms from insurer to the tune of 8 lacs. The service tax deptt. is claiming service tax on this income as business income. Please guide.Regards,Pradip.

AI Summary

Is Service Tax Applicable on Insurance Compensation for Factory Asset Losses? Explore Views & Legal Exemptions. A forum participant sought advice on whether service tax is applicable on compensation received from an insurance policy for factory asset losses. Several respondents shared their views: one argued that service tax is not applicable as no service was provided; another agreed, stating the compensatory claim does not constitute a service. However, a third suggested the compensation could be considered business income, thus subject to tax. Another response recommended reviewing the Negative List, Mega Exemption notifications, and relevant judgments for clarity. Lastly, a suggestion was made to consider Small Scale Industry (SSI) exemption if applicable.