Optima Insurance Brokers Pvt. Ltd.


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Impact of GST on insurance

June 12, 2017

Full form of GST is Goods and Services Tax. It is an indirect tax reform which aims to remove tax barriers between states and create a single market.GST will unify all the Central and State taxes into a single tax and would eliminate the surging tax effect or double taxation on sale of goods and services.

The GST Bill was passed by the Indian Rajya Sabha in August 2016 and will be effective from 1st Jul’17.

The GST Council has decided the slab rates at 5%, 12%, 18% & 28%.

As per the rates decided by GST council, insurance sector will have 18 per cent as GST rate. Currently, all non life insurance policies are charged 15 percent of the service tax, so this will go up by 3 percent.

Life insurance is slightly different. While term insurance is categorized as risk premium and taxed in line with motor and health insurance, savings products like Endowment and ULIP having a large component of consumer savings are taxed differently.

This immediate impact of increase in the tax from 15% to 18% will lead to the increase in the cost of insurance to be borne by the customer

Optima’s core group has more than 100 man-years of experience in insurance. Our experience has trained us in reading the fine print of insurance policies, understanding it and applying it for the benefit of our clients.

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