The implementation of GST was anticipated since a long time. Now that it has been implemented, it has impacted the insurance sector to a certain extent. The premium paid for insurance policies has increased by some margin. The minor increase is likely to affect the sector to some extent at least on a temporary basis as people may take some time to get adjusted to the new rates. However, in the long run, the GSTon insurance plans will only simplify other things for the insurance providers as well as insurance buyers.
In this way, there is no need to calculate service tax and other taxes on various policies.
Let’s understand how GST has impacted various general insurance products.
GST on Automobile Insurance
Earlier, the service tax rate for vehicle insurance was set at 15%. Now, it has now been hiked to 18% due to the implementation of GST. As per this slab, you need to pay an additional 3% on the premium amount for getting vehicle insurance. This is the same whether you choose the third party cover or the comprehensive coverage for your vehicle. The slab is also the same for all types of vehicles be it commercial vehicles or personal vehicles.
GST on Health Insurance
The GST on health insurance premium is also increased by 3%. Going by this new slab rate, customers will now have to pay 18% service tax on the premium paid for the health insurance policy.
GST on Travel Insurance
The next time you want to buy travel insurance for your tour, you will have to shell out 18% service tax on the premium. The earlier rate was slightly lesser at 15% and the new rates have increased them marginally.
Is There Any Way to Avoid GST and Save Money on Insurance Plans?
There is no way to avoid GST; you will have to pay it at the time of purchasing or renewing the insurance policy. Having said that, you can save money on the insurance plans by following the simple tips given below:
- Make sure you compare different options when you are buying a new policy online for yourself or for your family members. This will help you to get the best deals in the market. In addition to that, you can easily save money spent on the insurance policy.
- Remember that even though most companies offer similar insurance benefits, the rates may vary slightly depending on many factors. Most companies are eager to capture a good share of the market. As a result, they offer discounts on special plans and you can take advantage of this to save money on the premium.
Note- The GST on insurance policy will not change when you change your insurance provider as it remains the same for every company irrespective of other factors.
Over to You
The impact of GST on the insurance premium is felt to some extent by the insurance buyers. When you look at the larger picture, the implementation of GST does more good than harm as it reduces various other taxes. It makes it easy for different sectors run their business without any hassles.
That being said, you should never compromise on buying insurance for yourself and your family members just because the cost of insurance has increased by a small margin.