Registration and Rate of CST

The Dealers are provided with an option to register themselves under the provisions of Central Sales Tax Act, 1957. The Act provides special benefits to the Registered dealers like charging lower or NIL rate of CST on submission of Statutory Forms as prescribed for various types of Interstate Sales.

The unregistered dealers engaged in interstate transactions are required to pay CST at higher rates than the rates applicable to the Registered dealers. Also the unregistered dealers cannot claim any exemptions on the basis of Statutory Forms as specified by the CST Act.

The Basic Central Sales Tax Rate as applicable to the Interstate transactions made by the Registered Dealers is 2%. The interstate transactions are charged at this rate, if the purchasing dealer issues the Statutory Form – Form C to the selling dealer. The selling dealer submits this Form C with his sales tax authorities for payment of 2% and the forms are supplied by the Department on an application by the Registered dealers.  Also the interstate sales are exempted from CST, if such sales are made to specified persons or organisations, on submission of Forms like Form H, I, J etc,

In case of unregistered dealers, all the interstate purchases or sales made by them will attract the local sales tax rates of the selling state. No concessions or exemptions can be given for sales in the course of interstate trade made to any category of persons or organisations.

Some of the points relating to CST rates are as follows:

• For an inter-state sale to a registered dealer against form C, the rate of CST is 2% or local sales tax rate whichever is lower.
• Under the local sales tax law, if the sale or purchase is exempt or Nil, the rate of CST applicable in case of sale to unregistered dealer or registered dealers, will also be exempt or Nil.
• The Sales Tax rates applicable for sale of declared goods, w.e.f 1-4-2007 is as follows:

• The sale of declared goods made to registered dealer, will attract levy of CST at local sales tax rate or 2%, whichever is lower.
• The inter-state sale made to unregistered dealer, will be liable to CST at rates which is equal to VAT/sales tax rates as applicable within the State.

DIFFERENCE BETWEEN VAT AND SALES TAX IN INDIA

Difference Between VAT & Sales Tax in India

Value added tax and sales tax are a source of revenue for India's government.

The purpose of a taxation system is to enable the state treasury of a country to provide basic services and certain amenities to its people. India, as a nation, has a well-organized tax structure which is managed by two federal bodies: the Central and State Governments. Taxes are provisioned and implemented as per the Constitution of India, with the main being Customs Duties, Income Tax, State Excise, Stamp Duty, Service Tax, Entertainment Tax, Sales Tax and VAT (value added tax). VAT and sales tax are primarily levied as a source of revenue for the government.

1.   Characteristics

o    VAT is an indirect tax that is imposed on each stage of production of an item. It is reflected in the final price of an item, which is usually more than its cost of production.

Sales tax is a direct tax that is levied on a the price of a finished product, or service, and imposed on a buyer.

2.   Mechanism

o    VAT is calculated by subtracting the cost of output from the value of output. This can be written as: VAT = Value of Output -- Cost of Output.

VAT can also be calculated by subtracting the input tax from the output tax, or VAT = Output Tax -- Input Tax.

Sales tax is calculated by multiplying the current tax rate with the cost of an item, or Sales Tax = Tax Rate x Cost of an Item.

3.   Types

o    India's main types of sales tax are retail sales tax, luxury or selective sales tax, general sales tax, gross income tax and gross receipts tax.

According to James M. Bickley in the book "Value Added Tax," the main types of VAT include consumption VAT, gross product VAT and income VAT.

4.   Benefits

o    According to Alan S. Blinder in the book "The Economics of Public Finance," sales taxes are easy to administer, convenient to pay, preserve incentives, reach the fluid population (tourists, commuters and others on the move who typically evade income tax and other direct taxes due to their transient state), harmonize fiscal objectives by controlling extravagance to a certain degree, are correlated with progressive income tax and contribute to the government."

According to Dinesh Maidasani in the book "Straight to the Point - Tally 8.1," the VAT is a fairly straight forward tax that was implemented to reduce the complexities associated with the sales tax system. VAT is transparent, simple, flexible, equitable, fair and provides some revenue to India's government as compared to sales tax.

5.   Drawbacks

o    According to Blinder, sales taxes are regressive as they tend to burden poorer and larger families more heavily than richer and smaller families; and heighten deflation and depression in periods of financial crisis and unemployment.

VAT is often difficult to administer from business and administrative perspectives; and has a higher negative impact on labor intensive businesses as compared to capital intensive businesses.

NOTES ON CST ACT

OBJECTIVES OF CST ACT
(I) Objects of Enacting the Central Sales Tax Act, 1956
The act has been enacted to formulate the principles regarding the following:
(A) To formulate principles for determining when a sale or purchase of goods takes place:
i) in the course of Inter-State trade or commerce u/s 3; or
ii) outside a state u/s 4; or
iii) in the course of import into or export from India u/s 5.
(B) To provide for levy u/s 9(1) and 9(2) and distribution of taxes u/s 9(3) on sale of goods in the
course of Inter-State trade or commerce.
(C) To declare certain goods to be of a special importance in Inter-State trade or Commerce u/s 14.
(D) To specify the restriction and condition to which state laws imposing taxes on sale or purchase of
goods of special importance in the course of Inter-State trade and commerce shall be subjected
to u/s 15.

 FEATURES OF CST ACT
(II) Features of the Central Sales Tax Act, 1956
These are the important features of the Act:
(a) This Act extends to the whole of India.
(b) There are 26 sections in this Act.
(c) It contains the provision for single point tax.
(d) It also contains the provision for multiple-point tax.
(e) The declared goods (goods of special importance in inter-state trader or commerce) are taxed at
lower rate in comparison to other goods.
(f) The dealer, who have inter-state trade, is subject to tax without no exemption limit.
(g) The dealers, who are dealing in inter-state trade, are require to get themselves registered and
they should display the registration certificate at all places of business.
(h) Where the goods have been sold outside the state, the tax shall be levied by the Central
Government but it is collected by that State Government from where the goods have been sold
outside the state.
(i) The tax collected is given to the same State Government which has collected the tax.
(j) Tax collected is deposited in the ‘Consolidated Fund of India’, in case of Union Territories.
(k) For proper implementation of various provisions of this Act, the Central Government and the
State Government are empowered to frame rules and regulations.
1. Explain the Nexus theory Concept and discuss the remedies to the practical problems posed by
the nexus theory in case of taxability of inter-State transactions.
The nexus Theory in commodity taxation means that there should be a territorial nexus between the
person sought to be taxed and the State seeking the tax, i.e., territorial connection. (Nexus means
connection or relationship).
Elements of territorial connection:
(a) The connection must be real, not imaginary.
(b) The liability sought to be imposed must be pertinent to the connection.
However, nexus theory is not a licence for States to assume extra-territorial jurisdiction and levy tax on
transactions outside the State for simple reasons, such as:
· Mere presence of goods in the taxing State on the date of agreement even though property may
have passed elsewhere.
· Mere production or manufacture of goods in a State.
The limited utility of the Nexus Theory was discussed at length by the Supreme Court in the following
cases:
· Bengal Immunity Co. State of Bihar.
· Tata Iron and Steel Co. Ltd. vs. State of Bihar.
Article 286 was introduced in the Constitution to remedy this problem. It provides that:
No law of a State shall impose, or authorise the imposition of a tax on the sale or purchase of goods
where such sale or purchase takes place –
· Outside the State, or
· In the course of the import of the goods into, or export out of, the territory of India.
(III) Important Definitions Under Section 2 of CST
(a) Appropriate State [Sec. 2(a)]
As per Section 2(a) of CST Act, ‘Appropriate State’ means
(a) in relation to dealer who has one or more places of business in the same State, that State
(b) in relation to a dealer who has places of business situated in different States, every such State
with respect to place or places of business situated within its territory.
Thus, a dealer has to register only with sales tax authorities where he has ‘place of business’.
For example:
Places of Business Appropriate State
1. Allahbad, Kanpur, Varanasi and Lucknow Uttar Pradesh
2. Allahbad and Varanasi, Bhopal and Katni for Allahabad & Varanasi would be Uttar Pradesh
and for Bhopal and Katni would be M.P.
Importance of Appropriate State:
 The administration, levy and collection of tax has been delegated to the state, although it is a
Central Act.
 The provisions regarding returns, appeals, penalties, etc. are dealt with by the appropriate state.
 The tax payable by a dealer depends on the rates applicable to the sale or purchase of goods in
the appropriate state.
 Registration is carried out in the appropriate state.
 The authority to assess, reassess, collect and enforce the payment is entrusted to the officers of
the appropriate state.
(b) Business [Sec.2 (aa)]
Section 2 (aa) of CST Act defines that ‘business’ includes
(i) any trade, commerce or manufacture, or any adventure or concern in the nature of trade,
commerce or manufacture, whether or not such trade commerce, manufacture, adventure or
concern is carried on with a motive to make gains or profit and whether or not any gains or
profit accrues from such trade, commerce, manufacture, adventure or concern; and
(ii) any transaction in connection with or incidental or ancillary to, such trade, commerce,
manufacture, adventure or concern.
Note:
Thus, as per this definition, profit motive is immaterial. Business includes ‘Adventure’,
occasional transactions will also be covered. Adventure implies some ‘speculation’. Incidental
or ancillary business is also covered e.g. sale of used fixed assets, sale of scrap, sale of old
machinery & old furniture etc. is taxable, though normally the dealer may not be in business of
selling fixed assets, furniture or machinery e.g. Central Excise Authorities selling the goods
confiscated by them are liable to pay sales tax.
(c) Crossing the Custom Frontiers of India [Sec. 2 (ab)]
Section 2 (ab) of CST Act states that crossing ‘Customs Frontiers’ of India means crossing the
limits of the area of a customs station in which imported goods or exported goods are ordinarily
kept before clearance by customs authorities. Customs Station and Customs Authorities have
same meaning as per Customs Act.
Customs Station means customs port (for vessels), customs airport (for Aircrafts) or land
customs station (for trucks or motor vehicles). Central Government is authorized to specify such
places. Within such customs port, Customs area is specified by Customs Authorities where
imported goods or export goods are ordinarily kept by customs authorities.
(d) Dealer [Sec. 2 (b)]
Section 2(b) defines that “dealer” means any person who carries on (whether regularly or
otherwise) the business of buying, selling, supplying or distribution of goods, directly or indirectly,
for cash, or for deferred payment, or for valuable consideration, and includes
(i) a local authority, a body corporate, a company, any co-operative society, club, firm, Hindu
Undivided Family or other association of persons which carries on such business
(ii) a factor, broker, commission agent, del- credere agent, or any other mercantile agent, by
whatever name called, whether the same description as herein-before mentioned or not,
who carries on the business of buying, selling, supplying, or distribution, goods belonging
to any principal whether disclosed or not and
(iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any
principal, whether disclosed or not and whether the offer of the intending purchaser is
accepted by him or by the principal or a nominee of principal and
(iv) Any government which whether or not in course of business, buys or sells, supplies or
distributes goods for cash or for deferred payment or for commission, remuneration or
other valuable consideration is deemed to be a dealer.
However, in relation to any sale, supply or distribution of surplus, un-serviceable or old
stores or materials or waste products or obsolete or discarded machinery or part of
accessories, thereof, the government shall not be deemed to be a dealer under this Act.
(3) Following are not dealers:-
(a) a tailor; (b) a dry cleaner; (c) a doctor who treats a patient; (d) ornament maker who is
contractor for work and labour; (e) a photographer; (f) a painter; (g) a sculptor; (h) an
advertising (i) an artist who creates a work of art for reward (j) a newspaper publisher (k) a
radiologist.
Note: If the damaged goods of insurer are possessed by insurance company under the
‘doctrine of Subrogation; which is sold by the insurance company later on, than the
insurance company shall be treated as dealer.
(e) Declared Goods [Sec. 2(c)]
Section 2(c) of CST Act defines Declared Goods as those declared under Section 14 of CST Act
as goods of special importance in inter-state Trade or Commerce. Section 14 of CST Act gives
a list of such goods and section 15 specifies restrictions on power of States to tax such goods.
U/s 14, the following goods have been declared as goods of special importance in inter state
trade or commerce.
(1) Coals and coke in all forms (excluding charcoal.)
(2) Cotton in unmanufactured form but not cotton waste.
(3) Manmade fabrics___ fabrics of manmade filament yarn i.e. artificial textile material,
polyester filament yarn, staple fibres, polyester staple fibre tyre card, fabric, impregnated
textile fabrics etc.
(4) Cotton fabrics, cotton yarn (excluding cotton yarn waste).
(5) Hides and skins (Raw or cleaned)
(6) Iron and steel
(7) Jute – whether baled or otherwise
(8) Oilseeds
(9) Sugar and Khandsari sugar
(10) Unmanufactured tobacco, cigars, cigarettes, biris, chewing tobacco, snuff etc.
(11) Cereals i.e. paddy, rice, wheat, bajra, jowar, barley, maize, ragi, kolon, kutki etc.
(12) Crude oil i.e. crude petroleum oil and crude oil obtained from bituminous minerals
(13) Pulses i.e. gram, tur, masur, moong, urad, arhar, moth, khesari etc.
(14) Woven fabrics of wool.
(15) Aviation Turbine fuel sold to a Turbo Prop Aircraft.
Note:
(1) Under Section 15, there are some restriction and conditions in regard to taxation of declared
goods.
(2) The Tax payable on the sale or purchase of declared goods inside the state shall not exceed
4%.
(3) Tax shall not be levied at more than one stage in case of declared goods.
(4) The dealer shall be entitled to refund of tax, if the following conditions are satisfied.
(a) Tax has been paid at the time of sale or purchase to a state government of the declared
goods.
(b) Afterwards, all above goods are sold in the course of interstate trade or commerce.
(c) Tax has been paid on such goods under CST . Act.
(d) The dealer is fulfilling the conditions with regard to refund in the State Act.
(e) The refund shall be granted to the dealer who sells the goods in the course of Inter-State
trade commerce.
(f) The dealer who has paid tax to the state government shall not be entitled to claim refund.
(f) Goods [Sec. 2 (d)]:
Section 2 (d) of CST Act defines that ‘goods’ includes all materials, articles, commodities and all
kinds of movable property,
but does not include newspapers, actionable claims, stocks, Shares and securities.
Goods must be movable. CST cannot be levied on immovable property.
(1) Following are the instances of goods for C.S.T. Act:
(a) Electricity; (b) Copy right; (c) Patent; (d) Lottery ticket; (e) Readymade computer
software; (f) Advance REP license; (g) growing crops, grass, standing tress on the land, if
these have been served from the land, they shall become goods; (h) Air or water, if there are
made available to customers or consumers at cost (i) Old Newspaper if sold as waste.
(2) Following are the instances of not-goods (since these items has been specially excluded from
the meaning of goods for CST Act )
(a) Share; (b) securities like debentures; (c) Money; (d) Stocks; (e) Newspapers;
(f) Actionable claims; (g) Growing crops, grass, standing trees on the land.
Note: Actionable claims means which can be recovered through civil court.
(g) Place of Business [Sec. 2(dd)]
Section 2(dd) of CST Act defines that ‘Place of Business’ includes
(i) place of business of agent where dealer carries on business through an agent
(ii) warehouse, godown or other place where a dealer stores his goods
(iii) place where a dealer keeps his books of account. This is an ‘inclusive definition’ i.e.
other places of business e.g. where dealer has a shop factory is obviously covered.
A dealer can be have more than one ‘places of business’ within one State or even
within one city.
If he has ‘places of business’ in different States, he will have to register in each such State.
(h) Registered Dealer
It means a dealer who is registered under Section 7 of this Act. No dealer can make an Inter
State Sale unless he is registered under CST Act.
(i) Sales [Sec. 2(g)]
Section 2 (g) defines that Sale with its grammatical variations and cognate expressions, means
any transfer of property in goods by one person to another for cash or for deferred payment or
for any other valuable consideration, and includes a transfer of goods on hire-purchase or other
system of payment by installments, but does not include a mortgage or hypothecation or a
charge or pledge on goods.
Essential elements of sale are
(1) there must be transfer of goods;
(2) general property in the goods should be transferred to buyer from seller;
(3) consideration i.e. price must be paid or agreed to be paid;
(4) there must be two parties – buyer &seller;
(5) valid mutual consent of both parties is essential.
Deemed Sale [ Sec.2(g) (i), (ii), (iii), (iv), (v) and (vi)]
i. Transfer of property in goods for Cash, Deferred Payment or Other Valuable Consideration;
ii. Transfer of Property in goods (whether as goods or in some other form) involved in the execution of
Works Contract;
iii. Delivery of goods on Hire Purchase or under Instalment System;
iv. Transfer of right to use any goods for any purpose(whether or not for a specified period) for cash,
deferred payment or other valuable consideration;
v. Supply of goods by any unincorporated association or body of persons to a member thereof for
cash, deferred payment or other valuable consideration;
vi. Supply, by way of any service, of goods, being food or any other article for human consumption or
any drink(whether or not intoxication), where such supply or service, is for cash, deferred payment
or other valuable consideration.
Notes:
· ‘Hire-purchase’ is also included in the definition of ‘sale’.
· Sales tax cannot be levied on the full value of Works Contract but only on value of goods actually
transferred in execution of works contract.
· Incidence of tax only when property in goods is transferred and property is
transferred only when goods are ascertained. No Tax till the goods remain un ascertained.
· CST is payable even if there is compulsory transfer under Government orders,
if goods are a controlled commodity.
· Sale of illegal goods are also liable to sales tax.
· Sales include Barter.
There are some transactions which are not sales:
(a) Charge/mortgage/hypothecation etc.
(b) Leasing
(c) Job work/processing
(d) Consignment/depot transfer/branch transfer
(e) Work contract.
(j) Sales Price [Sec. 2 (h)]
Section 2(h) states that, ‘Sale Price’ means the amount payable to dealer as consideration for the sale of
any goods.
Sale price inclusive of CST: The ‘sale price’ is total consideration received and is taken as inclusive
of CST, whether or not it is shown separately in Bill (Invoice). Invoice can be prepared (a) by showing sales
tax separately in invoice, or (b) by not showing it separately-in which case will be cum-tax price i.e. price
inclusive of CST. In either case, ‘Sale Price’ will be the total amount received by the seller i.e. inclusive of
sales tax.
Sale Price is inclusive of following:
(a) Central Sales Tax- whether or not shown separately in invoice;
(b) excise duty-Sales tax is payable on excise duty whether or not shown separately in invoice and even if
paid directly by purchaser;
(c) cost of packing material;
(d) packing charges –i.e. labour charges for packing goods;
(e) bonus discount or incentive bonus for additional sales effected by the distributor/dealer
(f) insurance charges –if incurred by seller as per contract for F.O.R. delivery of goods:
(g) cost of freight if not separately charged in invoice (borne by seller);
(h) design charges charged separately in respect of the goods manufactured as per design and sold to
buyer is includible for purpose of sales tax;
(i) Any sum charged for any thing done by the dealer in respect of goods at the time of or before delivery of
the goods.
Exclusions from sales price are:
(a) freight & transport charges for delivery of goods when freight transport charges are charged separately
in invoice(borne by buyer);
(b) cost of installation and commissioning – if shown separately in invoice(borne by buyer);
(c) cash discount for making timely payment;
(d) trade discount – deduction from list price to wholesaler/dealer.
(e) transit insurance charges incurred at the request by buyer;
(f) goods returned by buyers within six months;
(g) goods rejected by buyers;
(h)custom duty paid by buyer, if goods sold on C.I.F. basis and documents handed over to buyer for taking
delivery of goods from customs after paying customs duty directly to customs authorities.
Determination of Sale Price
Detail Rs Rs
Price (Inclusive of Excise andcustoms duty ) xxx
Less: (i) Trade Discount xxx
(ii) Off-Seasonal Discount xxx
(iii) Special Discount xxx
Add: Expenses incurred before or at the time of delivery of goods e.g. Packing expenses,
Weightment etc.
Less: Cash Discount
(l) Sale Tax Law[Sec.2(i)]
Section 2(i) of CST Act, defines ‘Sales Tax Law’ as any law for the time being in any state or part thereof ,
which provides for the levy of taxes on sale or purchase of goods generally or on any specified goods
expressly mentioned in that behalf.
Section 2(i) also defines ‘General Sales Tax Law’ as the law for the time being in force in any State or part
thereof, which provides for the levy of tax on the sale or purchase of goods generally.
Some States also have laws for levy of tax on specified commodities or specified transactions. Such law is
not ‘general sales tax aw’ of a state.
(m) turnover [Sec. 2(j) ]
It is defined under Section 2(j) as aggregate of the sales prices received and receivable by him in respect of
sales of any goods in the courts of Inter- State trade or commerce made during any prescribed period and
determined in accordance with provisions of Central Sales Tax & Rules.
How to calculate Tax Payable?
CST(Rs.) = xRate
+
Aggregate Sale Price inclusive of CST
Rate of CST
of CST
100
(n) Works Contract [Sec.2(ja)]
Goods Returned [Sec. 8A(b)]
Section8A(b) provides that if goods are returned by buyer within six months, its sales prices will be
deducted
From ‘aggregate sale price’, if satisfactory evidence is produced sales tax authority in respect of the same.
(o) Exemptions from CST
(a) The exemptions are: (a) subsequent sales by transfer of document
(b) sale of goods which are exempt/chargeable to lower tax if sold within the State;
(c) exemption by issuing a notification; (d) sales in course of import/export.
(p) Exemptions by Issuing Notification
State Government can grant exemption under Section 8(5) in respect of inter-state sales effected from the
state.
Such notification should be in
(1) Public interest;
(2) by way of notification in official Gazette;
(3) exemption may be subject to condition;
(4)The exemption may be (i) to any dealer for goods or classes of goods or (ii) in respect of all sales of
classes of goods by any class of dealers
(5) The exemption may be total or partial.
(V) Formulation of Principles for Determining when a Sale or Purchase Of Goods Takes Place in the
Course of Inter-State Trade or Commerce (Sec. 3)
Section 3 of CST Act defines Inter-State sale or purchase as follows: A sale or purchase of goods shall be
deemed To take place in the course of Inter-State trade or commerce if the sale or purchase (a) occasions
the movement of Goods from one State to another or (b) is effected by a transfer of documents of title to
the goods during their movement from one state to another. Thus, inter-State sale can be as per Section
3(a) or Section 3(b).
As per Section 3(a), ‘Inter-State sale’ takes place if the sale occasions movement of goods from one State
to another. In Commissioner of Sales Tax Vs. Suresh Chand Jain- (1988), it was held that a sale can be
said to be in the course of inter-state only if two conditions occurs viz. (i) sale of goods and (ii) a transport
of those goods from one State to another. The essential ingredients of Inter-State sale, as decided in
various Supreme Court decisions are as follows:
(i) Transaction must be a completed sale.
(ii) There should be an agreement to sale which contains a stipulation(express or implied) regarding
movement of goods from one State to another.
(iii) It is immaterial whether a completed sale precedes the movement of goods or follows the movement of
goods are in transit. What is important is that movement of goods and the sale must be inseparably
connected.
(iv) There should be physical movement of goods from one state to another. Such movement must be
inextricably connected with sale. The contract may not provide for movement of goods. It is enough if such
movement is result of covenant of sale or is incidental to the contract. It is sufficient if the movement of
goods is implicit in the sale.
(v) It is immaterial in which State the property (i.e. ownership) of goods passes to the buyer.
(vi) Sale need not precede the inter-State movement. Sale can be either before the movement or after the
movement.
(vii) There should be no break between purchase and movement of goods to another State. The words
“occasion movement of goods” from one State to another are most important words in the section & are
subject matter of lot of litigation. The legal position is more or less settled through various judgements of
Supreme Court. The basis requirements are already enumerated above.

B.Com class Types of miscellaneous insurance

Miscellaneous Insurance

The various Policies under it are as follows:

 All Risk Insurance

Burglary Insurance Policy

Cash in Transit Insurance

Fidelity Guarantee Insurance Policy

Householder's Insurance

Shopkeeper's Insurance

Television Insurance

Special Contingency Insurance

Suhana Safar Insurance

Baggage Insurance

Plate Glass Insurance

Jeweller's Block Insurance

All Risk Insurance

SUBJECT MATTER COVERED:

The policy is specially suitable for covering Jewellery, Valuables, Curios, Antiques and other Works of Art, Paintings, Watches, Cameras and other similar articles.

PROPERTY NOT COVERED:

Fountain pens, Spectacles, Musical Instruments, Cufflinks, Clothing, Cigarette Cases, Silver Utensils, Money, Securities, Manuscripts, Deeds, Bonds, Traveller’s Cheques, Books of Accounts etc.

INSURED PERILS:

Fire, Riot and Strike

Burglary, House Breaking, Larceny or Theft

Accidental Loss or Damage

EXCLUSIONS UNDER THE POLICIES:

Although these policies are known as All Risk Insurance Policies there are certain exclusions such as

Loss arising from Wear and Tear

Damages caused by the process of repairing renovation etc.

Breakage of Lens and Cameras unless caused by fire/ accident to the means of conveyance

Mechanical/ Electrical Breakdown

IMPORTANT CONSIDERATION:

Moral Hazard is a very pertinent factor and policies are issued only to known and valued clients. A moral hazard report should be obtained from the marketing official or the concerned u/w officer about his her personal knowledge of the client for a minimum period of three years.

RATING:

Non Tariff

The normal lowest rate for First Class Proposal is 1.50%.

If in special cases the geographical limits are to be extended world wide the rate should be atleast 2%.

The above rate includes Riot and Strike.

Burglary Insurance(Business Premises):

APPLICABILITY OF INSURANCE:

The policy is available to Commercial Establishments. Factories, Godowns, shops etc. Burglary Policy can be issued only where a fire policy is also availed.

PROPERTY COVERED UNDER THE POLICY:

Stock in trade

Goods held in trust or on commission for which the insured is responsible.

Fixtures, Fittings and Utensils in Trade.

Cash and Currency notes secured in locked safe.

EXCLUDED PROPERTIES:

The property excluded under the policy include deeds, bonds, bills of exchange, promissory notes, cash treasury and bank notes, cheques, security for money, stamps, stamp collections, books of account, documents of any kinds, manuscripts, medals and coins, motor vehicles and accessories or livestock unless specifically insured.

INSURED PERILS:

Burglary or Housebreaking of property, by actual forcible and violent entry.

Theft by a person in the premises who subsequently breaks out by a violent and forcible means.

Damage to the premises by the burglars to be made good by the insured.

EXCLUSIONS UNDER THE POLICY:

Loss or Damage

Where insured’s family member or business staff is involved as principal or accessory.

By act of persons lawfully on the premises(larceny)

Consequent upon fire or explosion.

Perils insurable under a fire or Plate glass insurance policy.

Loss of cash from the safe following the use of key or duplicate thereof unless such key is obtained by violence or threats of violence.

Earthquake and other natural perils.

Riot, Strike and civil commotion.

War and Nuclear Risks.

TYPES OF POLICIES:

Declaration policy may be issued as in Fire Department

Floater policy on the basis of provision of the fire tariff may be issued.

First Loss policy may be issued for property except cash and/ or valuables where total loss is impossible.

Full value policy is the most common type of policy issued.

Cash In Transit Policy:

SCOPE OF COVER:

Loss of Money in Transit by the insured or insured’s authorized employees occasioned by Robbery. Theft or any other fortitude cause.

Loss of Money by Burglary, House-breaking, Robbery or Hold up whilst money is retained at insured’s premises in safe or strong room.

DEFINITION OF MONEY:

It shall include cash, bank draft, currency notes, treasury notes, cheques, postal orders and current postage stamps.

IMPORTANT CONSIDERATION:

The insured should indicate the address of the premises where cash is kept and also the Limits under each or the following situations.

Section 1:

Money for payment of wages or petty cash in transit from bank to office premises and cheques drawn by the insured for the above purposes from premises to bank.

Money for other purposes in transit between premises and bank.

Money other than above collected and in personal custody of the insured/ his employees in transit to the premises or bank within 48 hours time.

Section II:

Money kept in premises during business hours and whilst kept in licked safe or strong room after business hours against burglary, house breaking or hold up.

MAJOR EXCLUSIONS:

The Company shall not be liable in respect of:

Shortage due to error or omission.

Loss of money entrusted to any person other than the insured or an authorized employee of the insured.

Loss of money where the insured or his employee is involved as Principal accessory, except loss due to fraud or dishonesty of the cash carrying employee of the insured occurring whilst in transit and discovered within 48 hours.

Loss occurring on the premises, after business hours, unless the money is in a locked safe or strong room.

Loss occasioned by Riot and Strike and Terrorism (can be covered on payment of additional premium).

Money carried under contract of affrightment and theft of money from unattended vehicle.

Loss of money from safe or strong room following use of the key to the safe or strong room or any duplicate thereof belonging to the insured. Unless this has been obtained by threat or by violence.

RATING:

Section-I

Normally 0.35 per mile may be charged on ordinary risk in good locality. In case of remote, isolated places the rate may be charged upto 0-.50 per mile.

Section-II

0.25% to 0.50% depending upon risk perception.

Fidelity Guarantee Insurance Policy:

APPLICABILITY OF INSURANCE:

This insurance indemnifies the employers against

the financial loss suffered by them due to fraud, dishonesty during the course of employment of an employee or employees subject to the following conditions:

The cover granted is against the direct pecuniary loss and not a consequential one.

The loss should be in respect of monies or goods of the insured.

The act should be committed in the course of the duties specified.

If the employee guaranteed under the policy had left the services of the employer and was re-engaged by him, no liability attaches to the policy unless the consent of the insurers was obtained.

THE PERIOD OF DISCOVERY:

If the policy is not renewed or if the policy is canceled, losses must be discovered within 12 months from the date of expiry or cancellation of the policy.

Company is not liable for losses not sustained within a retroactive period not exceeding 2 years from the date of discovery.

EXCLUSIONS:

This insurance policy does not cover any loss:

Discovered more than 12 months after the death/ dismissal/ retirement of the employee concerned.

When there has been any change in the agreed system of check or accounting precautions, without the insurer’s prior consent.

Caused by an employee after discovery of his previous fraud or dishonesty.

Such as stock taking shortages, trading losses, not caused by fraud or dishonesty.

IMPORTANT CONSIDERATION:

The following particulars regarding the person to be guaranteed should be satisfactory:

Character

Financial position

Domestic Responsibility.

Previous experience

Previous record or service

Amount guaranteed in relation to remuneration

TYPES OF POLICIES:

COMMERCIAL FIDELITY GUARANTEE:

Individual Policy: Only one named individual is covered.

Collective policy: List of employees may be furnished. Each individual may have his respective guarantee amount shown against his/ her name. Advantage of this policy is that any change can be incorporated by just putting an endorsement.

Floater policy: Here list of employees may be furnished by individual guarantee amount is not mentioned. The guarantee amount is floated and can be pegged to any individual in the list upto the maximum limit mentioned in the policy. The policy is helpful for those employers who because of the functional intricacies may not be able to quantify loss in respect of each act of fraud or dishonesty by individual employees.

NOTE:

Floater cover should not be granted for persons numbering less than 5 in case of cover for unnamed persons, all persons without exception should be included. Sub-limits may be stipulated for each category of employees taking into account their functions and maximum amount handled by them.

Position policy: Guarantee amount shown against each position and no name is mentioned.

Blanket policy: Given to establishment with a wide network of staff. Just, a blanket amount for the total number of employees.

PROPOSAL FORM:

Normally for commercial fidelity guarantee policy there are two proposal forms viz., one given by the3 employer and another given by the employee.

HAZARDOUS RISK:

The collection agents whose cash limits are higher than his salary, such as jewelery and traveling salesman, cashiers in hotels, cinema halls, estate agents, treasurer in socio-cultural organization and employees of billion merchants are treated as hazardous risks under these policies.

House Holder’s Insurance:

APPLICABILITY:

This is a comprehensive package insurance scheme, meant for house holders, by combining a number of contingencies under single policy.

This policy comprises of 10 sections. They are as follows.

Fire and Allied perils (including earthquake, loss of or damage to building/ contents excluding money and valuables).

Burglary/ Housebreaking including larceny or theft: Loss of or damage to contents excluding money and valuables.

All risks: Loss of damage to jewelery or valuables caused by accident or misfortune whilst any where in India.

Plate Glass: Loss of or damage to fixed plate glass by accidental means.

Breakdown of domestic appliances: Unforeseen and sudden physical damage caused by mechanical or electrical breakdown of domestic, electrical, electronic or mechanical appliances specified in the policy and whilst contained in the insured premises.

Television Set: Loss of or damage to television apparatus including V.C.R/ V.C.P whilst contained in the insured’s premises.

Pedal Cycles: Loss of or damage to pedal cycles, and legal liability to third parties.

Baggage Insurance: Loss of or damage to personal baggage dud to accident or misfortune whilst traveling any where in India.

Personal Accident: Personal Accident Insurance for insured, his spouse and children as per personal accident insurance guidelines.

Public Liability: Legal liability of the insured in respect of accidental death or bodily injury to third party through fault or negligence of the insured/ family members. Legal liability as per W.C. Act/ Common Law towards employees.

ShopKeeper’s Insurance:

APPLICABILITY:

This is a comprehensive package insurance scheme meant for small shopkeepers whose property is valued at less than Rs. 10,00,000/-. It contains eleven sections. Maximum four sections will have to be taken in which section 1 and 2 are compulsory.

COVERAGE UNDER POLICY:

Fire and Allied perils: Loss of or damage to building/ contents (excluding money and valuables) Whilst contained in the insured’s premises.

Building

Contents

Burglary/ Housebreaking: Loss of or damage to contents (excluding money and valuables) whilst contained in the premises.

Money Insurance:

Loss of money in transit due to accident/ misfortune (Not exceeding Rs. 50,000/- per any one carrying).

Loss of or damage to money, valuables whilst contained in a burglar-proof safe (2% of the sum insured under Section or Rs. 10,000/- whichever is less)

Loss of money whilst lying in cashiers till and counter (1% of the sum insured under Section 1 or Rs. 5,000/- whichever is less).

Pedal cycles: Loss of or damage to pedal cycles and legal liability to third parties.

Plate Glass: Loss of or damage to fixed plate glass by accidental means.

Neon and Glow sign: Loss of or damage to Non Sign or Glow Sign by accidental external means/ Fire, lightning or external explosion/ Theft/ Riot, Strike, malicious Act.

Baggage Insurance: Loss of or damage to personal baggage of insured or baggage in connection with trade anywhere in India.

Personal Accident: Personal Accident insurance for insured/ his employees as per PA Policy

Fidelity guarantee: Direct pecuniary loss suffered by the insured due to fraud or dishonesty committed by any salaried employee excluding sales man and commission agents.

Public Liability: Legal liability in respect of accidental death or bodily injury to a third party or accidental damage to their property during performance of business.

Business Interruption: Due to operation of perils covered under Section I and subject to claim payable there under.

Television Insurance:

The Television insurance policy is designed to indemnify the insured against:

Loss of or damage to the Television apparatus by

Accidental external means

Fire. Lighting

Short circuiting

Flood and Storm

Bursting and overflowing of water tanks

Theft

Riot and Strike

Earthquake, fire and shock

Legal Liability to third party for accidental bodily injury/ damage to property arising out of the use of TV installation. Rs. 25,000/- for all claims out of one event.

IMPORTANT EXCLUSIONS:

The company will not pay first Rs. 150/- of any claim due to electrical causes or self-heating.

Damage to cathode ray tubes.

Burning out of valves or coils.

Theft of parts unless the apparatus is also stolen at the same time.

Special Contingency Insurance:

APPLICABILITY:

This policy covers loss against accidental external means, fire, external explosions, self ignition, lightning, burglary, housebreaking, theft and malicious act whilst the property is situated at a designated place.

EXCLUSIONS:

Mechanical or electrical breakdown

SPECIAL FEATURES:

Suggested rate is 2.5%

Whenever items are governed by tariff rates but covered under special contingency policy, it is to be ensured that tariff rates and excess are applied in respect of such items and no violations made in this regard.

INSURANCE FOR LAP-TOP COMPUTERS:

Laptop computers can be covered under special contingency policy on the lines of electronic equipments policy which also covers electrical or mechanical breakdown. However the rate charged for Lap-Top computers would be between Rs. 1.25% to 1.50%.

Suhana Sufur Insurance:

"PACKAGE INSURANCE COVER FOR DOMESTIC TRAVELERS"

SCOPE OF COVER:

The object of this insurance is to provide relief in case of accidental death and loss and/ or damage to accompanied baggage during traveling within the country as follows:

Rs. 1 lac per head irrespective of age and income, under Table I and Table II of PA policy.

Reasonable and actual emergency incidental expenses upto Rs. 1000/- per head arising out of an accident resulting in a valid claim under PA section.

Loss or damage to accompanied baggage arising out of fire, storm, tempest, hurricane, flood, inundation, riot, strike, malicious damage, accident, theft or burglary.

TABLE OF BENEFIT UNDER BAGGAGE:No. of persons 1 2 3 4 and above

Sum Insured (Rs.) 5000 10,000 12,500 15,000

SPECIAL PROVISION:

1.Cover is available to travelers by all modes. Road/ Rail/ Water and Air including those who travel by their own mode of transport.

2.Cover is valid for transit period subject to maximum of 60 days. The cover includes incidental local travel also.

Baggage Insurance:

SCOPE OF COVER:

This policy provides cover against loss/ damage to accompanied personal baggage of the insured due to FIRE, THEFT OR ACCIDENT during the course of the journey.

IMPORTANT EXCLUSIONS:

LOSS/ damage by wear and tear, moth, mildew, vermin.

Any process of cleaning, repairing etc.

Breakage of glass articles, china clay and articles of brittle nature.

Theft from unattended vehicles

Electrical and Mechanical breakdown

Loss or damage to articles while being worn or in actual use

Terrorism

SPECIAL CONDITIONS:

Articles in Pairs or Sets.

Single Article limit.

UNDERWRITING GUIDELINES:

The geographical limit to the above policy is ‘worldwide’.

The items covered to be specified with individual values. Valuation report shall be obtained for valuables like Diamond/ precious stones etc.

Non –Tariff business.

Guideline rate 0.75% - 5% based on clientele relationship/ other premium income etc.

Plate Glass Insurance:

SCOPE OF COVER:

The policy covers loss/ damage to fixed glass (Display windows, show cases etc) by breakage due to accidental causes.

IMPORTANT EXCLUSIONS:

Fire/ Explosion, Riot and Strike, terrorism.

Typhoon, Flood, Hurricane, Volcanic eruption, Earthquake and other convulsions of nature.

Damage to frame/ framework or any description.

Cost of lettering or painting.

DECLINED RISKS:

Bad localities, Empty shops, green house conservatories, unprotected glass at high levels.

Broken or cracked glass, movable mirrors.

RATE:

Rate is to the fixed depending on the merit of each individual proposal taking into consideration localities, risk involved, precautionary measures and previous claims experience etc.

SUGGESTED RATE: Between 4% and 6%.

Jeweler’s Block Insurance:

SECTION 1:

Loss/ damage to property (Gold, Silver items, Pearl, Precious stones etc.) insured whilst contained in the premises or deposited with a bank:-

Property insured on the premises

Property insured in display windows.

Cash and Currency notes.

Property Insured in Bank Lockers subject to the insured maintaining a separate register to record all deposits/ withdrawals in such lockers.

Perils Covered: Fire, Explosion, Lightning, Riot and Strike, Malicious Damage, Burglary, House Breaking, Theft, Robbery and Hold-up risk only.

SECTION 2: ALL RISKS COVER

Property insured excluding Cash and Currency Notes whilst in the custody of the Insured, his partners, Directors duly constituted Attorneys, his employees or sorters of diamonds.

Property Insured excluding Cash and currency Notes whilst in the custody of persons not in regular employment of the insured such as brokers or agents or cutters or goldsmiths.

SECTION 3: TRANSIT COVER ALL RISKS

Property excluding cash and currency notes whilst in transit within India by

Registered insured Parcel Post.

AIR Freight (Minimum 20% of value to be declared to the Airlines).

Angadias.

SECTION 4:

Office furniture and fittings against the perils mentioned in Section 1.Damage done by burglars and/ or thieves to the premises and/ or landlord’s fixtures and fitting for which insured is legally responsible as tenant upto 1% of SI under this section.

IMPORTANT EXCLUSIONS:

Loss or damage to the property insured due to:

Whilst it is being worked upon or during cleaning, repairing etc.

Inventory losses.

Whilst at any Public Exhibition.

Theft or dishonesty of the insured’s family members, servants employees, customer, broker, angadias, cutters, goldsmiths in respect of the property entrusted to them by insured.

Whilst in window display at night or whilst kept out of safes after business hours.

Any loss following use of key of duplicate key belonging to the insured unless it has been obtained by threat or violence.

EQ, Volcanic eruptions, flood, storm etc.