Recently on 01-01-13 a circular no. 166/1/2013-ST has been issued by the Central Government to provide clarification on taxability of reminder letters generally issued by the Insurance Companies to the life insurance policy holders for soliciting the furtherance of services of Life Insurance.

Vide the above referred circular, it has been clarified that as per Point of Taxation Rules, 2011, point of taxation is the date of invoice (as mentioned in rule 4A) or receipt of payment, whichever is earlier. However, these Reminder Letters do not fall in the category of invoice as given in rule 4A, hence service tax is not leviable on the same.

NOTE: Since, in the Circular itself it is mentioned that the circular is for Life Insurance Sector only, The Assessee rendering other service may also approach TRU to use this proposition where payment is contingent. Say, RWA, Builders etc.