Here is the latest guide you need about the GST on Two-Wheeler Insurance.
Every two-wheeler owner is required by the Motor Vehicles Act of 1988 to buy third-party liability insurance. Third-party liability insurance assures that any third-party vehicle or property destroyed by your vehicle will be compensated by the insurer. However, comprehensive bike insurance policy is required to protect against damage caused by accidents and natural disasters.
Now, while you shop for a Two-wheeler insurance policy, you may have GST-related questions. Let us now answer all of your concerns.
Goods & Service Tax (GST)
GST, or Goods and Services Tax, is a multistage indirect tax applied on all goods and services in India. It was implemented in an attempt to replace all existing indirect taxes levied on products and services in India, such as VAT, service tax, excise, and so on. On March 29, 2017, the parliament passed the Goods and Services Tax Act. It went into effect on July 1, 2017.
There are three kinds of GST collected.
1. CGST:
The amount of tax paid to the central government. VAT (Value Added Tax) and central excise are the two components.
2. SGST:
This is the state government's tax revenue. It is the same as the amount paid to the federal government. VAT accounts for a portion of it, while service tax accounts for the remainder. Both CGST and SGST are solely levied on intra-state transactions, that is, transactions that take place within a single state in India.
3. IGST:
IGST is levied on interstate transactions in which something is sold from one state to another. It is collected by the federal government and distributed based on the state of residence of the purchaser.
The GST rate is divided into four categories: 0%, 5%, 12%, 18%, and 28%. Specific goods and services are classified differently.
GST Applicable on Bike Insurance
Because two-wheeler insurance is a service that you purchase, it is subject to GST. The premium amount you pay on a monthly, quarterly, semi-annual, or annually basis includes GST on bike insurance. A tax of 18% is applied to your premium amount.
GST Impact on Bike Insurance Premium
Before the implementation of GST, the tax on motorcycle insurance was 15% (14 per cent service tax + 0.5 per cent Krishi Kalyan Cess + 0.5 per cent Swachh Bharat Cess). Following the implementation of GST, that figure increased to 18%. This 3% gain may appear to be significant. However, insurers have done enough to compensate for the minor increase in premiums by providing greater coverage.
Here's an example of how GST has affected motorcycle insurance premiums and how insurers have dealt with it. Assume you pay Rs. 3,000 as your bike insurance premium. With the prior tax rate of 15%, you will now have to pay a premium of Rs. 3,450. You will have to pay Rs. 3,540 due to the imposition of 18% GST. As a result, you end up spending Rs. 90 more than you did previously. Two-wheeler insurance providers, on the other hand, make up for it by providing you with additional coverage. For example, many insurers now include roadside assistance as part of the standard package. A roadside assistance plan allows you to seek aid if you become stranded due to a flat tyre or running out of gas.
Is It Possible To Include Your GST Number In Your Bike Insurance Policy?
The GST identification number (GSTIN) is a 15-digit number that is assigned to each individual based on their PAN card number. Each GSTIN includes a beginning code, your PAN number, the number of registrations made under the same PAN in a single state, the alphabet "Z" by default, and a check code for error detection. You can apply for a GST number either online through the GST portal or in person at a GST Seva Kendra.
The answer is yes, your GST number can be added to your bike insurance policy. Simply contact a customer service representative, and your GST number will be added to your 2-wheeler insurance.
GST was implemented in an attempt to simplify the country's tax system. It does raise the cost of your motorcycle insurance. However, you do receive additional coverage, which makes it worthwhile. Purchase appropriate bike insurance policy from us - we offer wide coverage and may be applied for quickly.
