With effect from 1 July 2017, Goods and Service Tax, frequently known to as GST, has been presented throughout India. In modern years, it is considered to be among the largest indirect tax reforms, dissolving almost all indirect taxes at the state and central levels.A cohesive, destination-based taxation system will be implemented by the country, thereby substituting indirect taxes such as VAT, excise duty, CST, service tax, entertainment tax, luxury tax, etc. GST is a valuation tax which will solve this issue of both the impact of the cost of goods and services cascading down its value chain.
General insurance plans involve health insurance, motor insurance, travel insurance, fire insurance, marine insurance, etc.
1. General insurance plans involve health insurance, motor insurance, travel insurance, fire insurance, marine insurance, etc. Also, with 18% Introduction of GST, an additional 3% is leviable by the policyholders on the health insurance premiums, from the earlier 15% Service Tax
2. The GST rate for vehicle insurance has indeed been established at 18%, increasing the entire price of vehicle insurance plans costly (compared to the 15 percent service tax payout).
3. The GST rate on insurance premiums for overall insurance policies was therefore set at 18 percent, to summarize.
4. Input tax credit to the GST charged for their policies can be sought by corporate policyholders that have purchased general insurance policies.
What will be the Impact of GST on buying Insurance?
Purchasing an insurance policy constitutes an essential part of any financial decision for a person. The variables depending on which insurance policy is selected differ from one person to another. For example, motor insurance is compulsory according to the Motor Vehicles Act when one owns a car, whether that is a two-wheeler or four-wheeler.Likewise, in the event of a medical emergency, health insurance plans are a great way to plan for financial aid and to reduce ever-increasing medical costs. The benefits of health insurance coverage make up for the rise in service rates.
It is clear that there is an inconsequential rise in GST rates relative with service tax rates in relation to both the insurance premiums charged by policyholders, which may lead to an overall rise in the value of general health plans. Insurance firms will strive to make policies affordable by reducing their expenditures linked to these policies in order to continue attracting consumers.Policies would be made more attractive because insurance companies would be prepared to offer a similar cost variety of potential advantages. That alone would also not be smart for insurance buyers to structure their policy purchase decision simply on premium pricing.Knowing their individual needs, policy features, cashless alternatives, pregnancy cover, pre-existing illness cover, critical illness cover, add-on benefits, policy riders, policy periods, inclusions, and exclusions, etc., will become more essential aspects to be considered into account when choosing insurance policies.