We deals in life insurance, car insurance, car insurance online, vehicle insurance, insurance policy, bike insurance, general insurance, online insurance, travel insurance, health insurance plans, health insurance, term insurance, medical insurance, Income Tax Return, Health Insurance, Car Insurance, Bike Insurance, GST, Return

Effect of GST on Insurance Premium

With  a hike in GST rates to 18% from the current 15%, the insurance sector are poised to get more expensive after July 1, 2017. The immediate effect will be the increase in premiums especially for families that own Life Insurance, Health Insurance and Car Insurance.

The existing and new insurance buyers would have to bear the updated prices. The Policy holders stand a chance to be benefited if the insurance providers get a green signal on the input tax credit benefit. Unfortunately, as of yet, it is still unclear since he Center/State GST  structure is very complex. It might create confusions and conformity for the insurance buyers and increase the administrative expenses for the insurance providers. If the insurance buyers remain confused about the GST updates, then irrespective of the increase or decrease in the prices the financial strength will adversely affected. The general insurance sector will be equally impacted. The overall outgo for health, car, and various non-life plans would be increased by 3 percent.

The Insurance policies premium represents two components - Savings and Risk Coverage. The service tax is levied specified only on the premium component. 

What GST (Goods And Service Tax) Rules says, the value of service on which the GST is levied regarding the life insurance sector shall be accordingly;
(i) The gross premium would be reduced by the amount allocated for or savings or investment on policyholders behalf.
(ii) When it comes to the single premium annual policies, ten percent of the single premium would be charged from the policy holder.
(iii) In other cases, 25 percent of the premium for the first year and 12.5% of the premium in the upcoming years will be charged.
(iv) In case the total premium paid by the policy holder is towards the life insurance's risk cover, oly the 18% GST would be levied on the total premium.

There are three types of life insurance;
* Term Insurance Plans - Basic life insurance policy
** ULIP Plans - Insurance and investment under a single integrated plan
*** Endowments Plans (including money back plan) - Life insurance policies that pay a lump sum on maturity/death or a fixed sum every month (like pension)

List of new revised rates on all insurance plans are as follows :
GST RATES : NEW RATES UNDER GST FOR
INSURANCE POLICIES
INSURANCE PRODUCTS
BEFORE GST
AFTER GST
APPLICABILITY
Endowment Plans – 1st Year
3.75%
4.50%
On 25% of Premium
Endowment Plans – Renewal Premium
1.88%
2.25%
On 12.5% of Premium
Health Insurance Premium
15%
18%
On Entire Premium
Rider Premium
15%
18%
On Entire Premium
Annuity: Single Premium
1.50%
1.80%
On 10% of Premium
Term Insurance Premium
15%
18%
On Entire Premium
ULIP (On Charges)
15%
18%
On Premium minus
Investment Amount
Vehicle Insurance
15%
18%
On Entire Premium
Travel Insurance
15%
18%
On Entire Premium

Life and health insurers will not have input tax credit as it is not available for life and health insurances ( as they are for personal purposes). Even corporate policyholders with group life and health insurance for their employees will not enjoy any input tax credit.

Life insurance provided under Government Schemes are exempted from GST;
1) Janashree Bima Yojna (JBY)
2) Aam Aadmi Bima Yojna (AABY)
3) Life Micro-Insurance product (as approved by the IRDA having maximum amount of cover of fifty thousand rupees)
4) Varishtha Pension Bima Yojna (VPBY)
5) Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY)
6) Pradhan Mantri Jan Dhan Yojna
7) Pradhan Mantri Vaya Vandan Yojna 
8) Any other insurance schemes of the State Government as may be notified by Government of India on the the recommendation of GST Centre.

Share:

0 comments:

Post a Comment

SAVE TAX SAVE MONEY With Insurance
Copyright © SAVE TAX SAVE MONEY | Insurance | Accounting | Taxation