GST - Goods and Service Tax, even though people weren’t ready for it, the same was brought into effect to replace the traditional tax system. Now, though it has already been 2 years, people are still finding it difficult to gauge the possible impact of GST. The primary reason is the GST slab which isn’t popularly defined because of which people still are not able to categorise and determine the applicable GST.
The same is true for people planning to buy a life insurance or any other insurance for that matter. The latest changes in insurance policies, though stated clearly in policy documents, are still not clearly understandable. Hence, let us talk about the possible impacts of GST on life insurance schemes.
3% additional GST on Premiums!
As per the previous tax structure, a tax of 15% was levied on life insurance premiums. However, post GST, people will have to pay an additional 3% GST on insurance premium. For instance, if you were paying Rs 40, 000 every year against your life insurance policy which is inclusive of 15% service tax, you will now have to pay an added 3%, i.e. an extra amount of Rs. 1200 on the premium.
Read Also: Effect of GST on life Insurance Policy Premium Amount
GST impact on individual insurance schemes:-
In case of endowment plans, service tax of 3.75% was previously imposed therefore the GST impact is not much on these schemes: the revised service tax has been increased to 4.5%.
In case of term insurance plan, the service tax post GST would be 18%.
Alisha Antil is your best financial helper for insurance. She has a vast experience in finance and insurance and provide to you the expert advise in insuring your property and health. She has in depth knowledge and has written more than 1200 blogs on topics related home and car insurance. She also provide you with knowledge about home improvement and cooking.