The Union Finance Minister Nirmala Sitharama presented her record eighth Union Budget 2025-26 in Parliament today ,February 1. Delivering the first full budget of Third Narendra Modi-government, Nirmala Sitharaman has become the only finance minister to present the Union Budget for eight consecutive times.
Among the key announcements in her speech was a significant proposal to provide retrospective service tax exemption for reinsurance services provided by insurance companies under specific agricultural insurance schemes.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
In a move aimed at providing relief to insurance companies and supporting the agricultural sector, the Finance Minister proposed a retrospective exemption from service tax for reinsurance services provided under the Weather Based Crop Insurance Scheme (WBCIS) and the Modified National Agricultural Insurance Scheme (MNAIS). The exemption will apply to services rendered between 1st April 2011 and 30th June 2017.
This proposal, introduced under Clause 130 of the Finance Bill 2025, seeks to rectify the tax burden on insurance companies that provided reinsurance services under these schemes during the specified period. The clause states that no service tax shall be levied or collected on these services, even though they were previously subject to taxation under the Finance Act, 1994, and subsequent amendments.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
The Weather Based Crop Insurance Scheme (WBCIS) and the Modified National Agricultural Insurance Scheme (MNAIS) are critical initiatives designed to protect farmers against crop losses due to adverse weather conditions and other natural calamities. By exempting reinsurance services from service tax, the government aims to reduce the financial burden on insurance companies, enabling them to offer more affordable and accessible insurance products to farmers.
The retrospective exemption is expected to provide significant relief to insurance companies, which have been grappling with tax demands for services rendered over six years ago. This move aligns with the government’s broader objective of promoting agricultural resilience and ensuring the sustainability of crop insurance schemes.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
The Finance Minister emphasized that this exemption is part of the government’s commitment to supporting the agricultural sector and ensuring the smooth functioning of critical insurance schemes. By addressing past tax liabilities, the government aims to foster a more conducive environment for insurers to participate in agricultural insurance programs, ultimately benefiting farmers across the country.
In conclusion, the retrospective service tax exemption for reinsurance services under WBCIS and MNAIS reflects the government’s proactive approach to resolving long-standing tax issues and supporting the agricultural sector. This measure is expected to strengthen the crop insurance ecosystem, providing much-needed relief to both insurers and farmers.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
