Cross-border online services subject to service tax

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The Reserve Bank of India (RBI) has amended the memorandums of foreign exchange management regulations relating to general/health insurance and life insurance, in line with the repeal in 2015 of the Foreign Exchange Management (Insurance) Regulations, 2000, and their replacement, via a notification date 29 December 2015, with the Foreign Exchange Management (Insurance) Regulations, 2015.

Next_with_golden_eggsThe major changes are as follows:

  • All general/health insurance policies permitted by the Insurance Regulatory and Development Authority of India are allowed to be placed in foreign exchange. No RBI permission is required for issuance/renewal of any insurance policy.
  • Payment of insurance premium in foreign currency by an Indian resident is no longer required irrespective of the currency for settlement of a claim.
  • A resident outside India may obtain a general/health insurance policy on payment of the insurance premium in foreign currency irrespective of the currency for settlement of a claim. However, if the premium is paid in Indian rupees, settlement of a claim will be in rupees.
  • A resident going abroad for employment purposes may take a health insurance policy on the payment of a premium in Indian rupees. Claims settlement under cashless international health insurance policies to hospitals providing treatment, or through third party administrator arrangements, is now allowed.
  • Overseas investment by insurance companies is enabled.
  • Quarterly reports by insurance companies on settlement of claims of policies issued with RBI permission are discontinued.

The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.