In India insurance industry consist of 53 companies. Life insurance are 24 and 29 are non-life insurer. Both life insurance and general insurance products are countrywide. Life Insurance Corporation LIC is sole public sector company. LIC have 70.4 per cent market share. Insurance Industry will be affect with GST install. Not only insurance industry, but also policy holders will be affect with GST tool.
Different types of Insurance plans affect GST
All policyholders have to pay high premiums on their insurance due to increase in GST. It effect will be increase in premiums that own health, life and car insurance policies. As per rates declared by GST council, insurance sector will have 18 per cent as GST rate. See what are types of Life Insurance?
Both existing and new policyholders will face increase in premium due to increase in rates. GST will increase service tax from 15% to 18% in Insurance sector. After GST implication, different types of Insurance plan will affected in following ways.
Health Insurance Plans
Health Insurance has tax rate of 15% on its premium. But after GST roll out it will attract tax rate of 18%. So, cost of buying health insurance will be increase. With install of GST, buy cost of health insurance will become expensive. It will attract tax of 18 % on premium.
Endowment policy is life plan. It cover both death and maturity benefits. It pays lump sum amount after specific term or on death. Tax rate on endowment plans is 3.75 per cent for first year. And 1.88 per cent for second year. After GST impact on Insurance Sector will lead to tax rate of 4.5 per cent for first year. And second year is 2.25 per cent.
ULIPs is Unit Linked Insurance Plans. It offers benefits of both insurance and investment. At present, tax rate apply is 15 per cent. But after GST roll out it has increase to 18 per cent. Check What you can do to pay low premium?
General insurance includes fire insurance, marine, car insurance, theft insurance. GST rate will also be 18% on general insurance. Under current tax, 15 per cent tax is applicable on motor insurance policies. But after GST installs this will increase to 18 per cent tax rate.
If you are confuse about GST as business owner. You can get assistance on GST registration and GST Return Filing. You can also use GST software for end-to-end GST compliance. So policyholder who has taken general insurance. They will enjoy input tax credit on GST paid on their policies.
Impact on Buying Insurance
It is true that GST will make buying insurance is expensive. But it is very important for you to secure his life. Life insurance plans and term insurance plans are real life insurance plans. Which cover you and your family in your absence?
It is important to look at type of insurance plan. It includes benefits, policy coverage, policy term and its cost (premium). Also, with increase in insurance premiums. There will be competition among insurers for offer best insurance to you.
Also see GST impact on insurance claims. You can check GST rate for life insurance. Thus see GST on insurance premiums. To know more details see impact of GST bill on insurance industry in India. You can see GST on general insurance premium.