Overview of Two Wheeler Insurance Insurance Sector Post GST

The most crucial thing that we keep in mind while purchasing an insurance policy is the premium. Despite our requirements, it is the budget that becomes the deciding factor. People with a tight budget often favours the third party insurance policy as it is cost-effective. With Goods and Services Tax (GST) being implemented, all policyholders may have to rethink their choices, because bike insurance sectors are no exception from this good and services tax. Similar to any other industry, the insurance sectors are facing a rise in their payable taxes. The rise in the services taxes will have direct influence over insurance policies and you may have to pay a higher premium.

What Is GST?

The GST took over the previous tax system between the centre and states. The aim behind implementing this tax is to combine all central and state taxes imposed on goods and service into a single tax mechanism for the entire country.

How GST Affects the Insurance Sector?

The Goods and Services Tax (GST) has impacted the insurance industry in the following ways:

Hike In Policy Premium

The GST was implemented with effect from July 1, 2020. As per the law, a 3% hike is now implied on insurance products and services. Hence, from the previous 15%, the insurance sectors now pay a GST of 18%. Life insurance products to all general insurance products, including bike insurance and other motor insurance policies, come under the new GST rate. It includes new insurance policies as well as the renewed ones.

As a result of the hike, the premiums of the third party insurance policy, the standalone damage policy as well as the comprehensive insurance policy will go up.

Increased Competition Among Insurance Companies

A hike in the premiums can be a drawback for the policyholders. Many may become reluctant in buying a policy or may stick to the third party or the standalone damage policy. In such a case, the insurance companies will try to create and maintain demands for policies. To do so, the insurance companies will come up with additional features or benefits to attract people. This will naturally add to the competition in the market.

Do All Insurance Schemes Come Under GST?

GST is not applicable for central and state government initiatives. Hence, the following schemes are excluded from GST:

• JBY or Janashree Bima Yojana
• AABY or Aam Aadmi Bima Yojana
• Pradhan Mantri Vaya Vandan Yojana
• Varishtha Pension Bima Yojana
• Pradhan Mantri Jan Dhan Yojana
• Pradhan Mantri Jeevan Jyoti Bima Yojana
• Life Insurance for Army, Navy and Air Force members, offered by the Central Government.
• Insurance Regulatory and Development Authority approved micro life insurance products with the maximum cover capped at Rs. 50,000.

GST On Different Insurance Products

The premium numbers in the insurance sectors are definitely facing rise and the impacts are clear. The market competition can prove to be highly beneficial for policy buyers. Keep an eye on the market conditions to avail the benefits.

Types of Bike Insurance You Should Know:

Third Party Two Wheeler Insurance

Comprehensive Two Wheeler Insurance Policy

You May Also Like To Read:

What is a Bike Insurance Renewal?

Two Wheeler Insurance Add-ons

Bike Insurance Details by Registration Number

Fine for Driving Two Wheeler Without Insurance

How to Get Duplicate Two Wheeler Insurance Copy Online

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.