The Central Goods and Services Act of 2017 is one of the greatest tax reforms since India got freedom. Its implementation will have significant implications on various industries including the insurance industry. The GST is expected to bring about a noteworthy change in the fiscal structure of the country. Before the implementation of GST, an item would incorporate a few sorts of duties and taxes that most people are unaware of. GST would cut down these tax impositions and would make taxation easy for the entire nation. Read on to know how GST has influenced the two wheeler insurance sector.
Effect Of GST On Motor Insurance
The tax rate for insurance has been set as 18% by the GST council. This has been 3% higher than the 15% tax rate in the past. This increased tax burden will be passed down to insurance buyers who would be paying a higher premium on their insurance policies.
A Bike insurance is categorised under the general insurance class. While a third-party insurance cover is the basic and essential policy enforced by the law, a comprehensive cover guarantees a more security and incorporates third-party obligations too. Though it may be costlier than a basic insurance policy, it covers you against a variety of risks. GST on two-wheeler insurance has been set at a 18%, which is 3% more than the tax rate before GST implementation. This will make insurance costlier for any type of general insurance policy buyer. Looking at the positive side, the GST will trigger competition amongst the insurers and they may offer greater benefits to customers in order to grab a bigger market share.
The GST Factor While Buying Two Wheeler Insurance
If you wish to buy a bike insurance policy online, the premium rate will be higher than what you would have paid a year ago. While you search for an insurance policy, don't blindly go with the one offered at a lesser premium, do look for the scope of protection offered by the insurer. You may check various third-party sites and compare different policies considering the coverage and the premium offered.
After Effects Of The GST
A bike is one of the essential necessities for many individuals in India. Getting your bike insured is crucial as you can never predict when you encounter an unexpected situation. In any such incidence, a bike insurance provides you a financial backup. A rise of 3% tax rate for insurance should not be considered as a major factor in buying the policy.
When you purchase a motor insurance policy, there are a few things that you should pay attention to. A lesser premium isn't generally the right factor in buying insurance. Your policy should adequately cover you against several types of risks. You should comprehend the extent of the coverage offered by the policy, the total sum assured by the insurer, its highlights and benefits, terms and conditions, and the exemptions. Even if the GST is slightly more, there is no reason to make compromises on the coverage you expect from your policy.
While it cannot be denied that insurance has turned out to be costly post GST implementation, it isn't a reason enough to avoid buying the right insurance cover for your vehicle and yourself. It is important to not look at premium as the deciding factor and look for the overall coverage that your policy offers you.