Gold Life Insurance Company Limited has collected premium from policy subscribers. It does not intimate the amount allocated for investment to subscribers of the policy at the time of supply of insurance services. The co

Answer 1(b) As per rule 32(4), the value of supply of services in relation to life insurance business shall be determined as below: the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such an amount is intimated to the policy holder at the time of supply of service. in case of single premium annuity policies, 10% of single premium charged from the policy holder; in all other cases, 25% of the premium charged from the policy holder in the first year and 12.5% of the premium charged from the policy holder in subsequent years; in case the entire premium paid by the policy holder is only towards the risk cover in life insurance, the premium so paid. Therefore, in the given case, the value of the services provided by Gold Life Insurance Company Limited will be computed as under: Computation of value of supply for Gold Life Insurance Company Limited Particulars Amount in Rs. (i) Variable insurance policies (Gross premium - Amount allocated towards investment) (₹ 30,00,000 - ₹ 24,00,000). [Since the insurance company has provided separate receipt for premium allocated for investment, it is assumed that such allocation is informed to the insured at the time of provisioning of service.] 6,00,000 (ii) Life micro-insurance policies [Exempt vide entry 36 of Notification No. 12/2017-CT (Rate)] Nil (iii) Renewal premium 12.5% of ₹ 90,00,000 11,25,000 (iv) Single premium on annuity policy 10% of ₹ 1,00,00,000 10,00,000 Total value of supply 27,25,000 Alternative Answer 1(b) As per rule 32(4), the value of supply of services in relation to life insurance business shall be determined as below: the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such an amount is intimated to the policy holder at the time of supply of service. in case of single premium annuity policies, 10% of single premium charged from the policy holder; in all other cases, 25% of the premium charged from the policy holder in the first year and 12.5% of the premium charged from the policy holder in subsequent years; in case the entire premium paid by the policy holder is only towards the risk cover in life insurance, the premium so paid. Therefore, in the given case, the value of the services provided by Gold Life Insurance Company Limited will be computed as under: Computation of value of supply for Gold Life Insurance Company Limited Particulars Amount in Rs. (i) Variable insurance policies [The question specifies that it was not intimating to subscriber at the time of supply, accordingly rule 32(4)(c) will apply i.e. 25% of 30 lacs] 7,50,000 (ii) Life micro-insurance policies [Exempt vide entry 36 of Notification No. 12/2017CT -(Rate)] Nil (iii) Renewal premium 12.5% of ₹ 90,00,000 11,25,000 (iv) Single premium on annuity policy 10% of ₹ 1,00,00,000 10,00,000 Total value of supply 28,75,000