Here’s How Car Insurance Looks After GST.
To drive an uninsured car is to violate the Motor Vehicles Act and a betrayal of your efforts into buying that said car. Insuring your car is the first step to protection.
However, not many people understand insurance, thanks to jargon filled policy documents. And post the GST implementation, insurance has become harder to decipher. Here’s a short snippet to help you navigate car insurance after GST.
What is Car Insurance?
You pay a regular fee (premium) and in exchange, the insurance firm insures your vehicle.
There are two types of insurance: Third-party insurance plans and Comprehensive Insurance Plans.
Third-party protects you from third-party lawsuits and comprehensive plans cover your vehicle against man-made and natural calamities.
If you are injured (owner/driver) while in the car, the insurance firm compensates you.
Insurance firm offers a variety of add-ons to strengthen your car insurance’s effectiveness.
What is GST?
GST stands for Goods and Services Tax and was introduced on June 1, 2017.
The GST is a one tax replacement for the many indirect taxes which were previously levied on goods and services.
This tax has two components: Central GST (CGST) and State GST (SGST).
Taxation will depend on the tax slot a good or service is allotted into.
There are 4 slabs: 5%, 12%, 18%, 28%.
Car Insurance GST?
Before GST, car insurance was taxed at 15%.
Post GST, car insurance comes under the slot of 18% tax.
The 3% rise in the start will be borne by policy holders in the start with higher premiums.
To retain and attract customers, insurance firms will have to compete against each other.
You can expect more effective covers and excellent service as a result of the GST 3% tax hike.