Stamping it out

The technology of centralized processing system adopted by the private insurance companies has left the state government of Rajasthan fuming. This is so because it is affecting the revenue of the government. Presently, private insurance companies are issuing the purchase of insurance stamps from the places where the policies are printed whereas the sate government wants the charges of stamp duty to be paid in the place where they are sold. This has resulted in a clash between the government and the private insurance company. Looking at he grimness of the situation, the Life Insurance Council has come into the picture and it will appeal on behalf on the life insurance companies. As far as the law is concerned, it mentions that the stamp duty is paid from the place where it is issued. Last year, the insurance companies paid an amount of Rs 100 crore as the stamp duty charges. Out of this amount, the state insurer itself paid 70%. The central processing centres are usually located in places, which are convenient. It acquires the first priority. When LIC had monopoly in insurance, the locally issued polices paid the stamp duty charges at the local stamp office itself. But now with so many insurance companies, the revenue generated is high but this generated amount is diverted to the government of the respective place where the policies is being printed. This leaves with very little revenue to the government where policies are being sold. The Rajasthan government had brought out this issue. These centralized processing centers for companies are usually located in places like Mumbai, Chennai, Banglore and now even Gurgaon has joined the group. The stamp duty that is payable is applicable for non life insurance products as well. Since the number of life insurance policyholders is large, the subject matter becomes more imperative.

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