Goods And Service Tax - Impact on Life Insurance Policies
As you may be aware, with effect from 01st July 2017, the Goods and Services Tax (GST) is applicable which has replaced most of the existing indirect taxes including Service Tax, Swachh Bharat Cess and Krishi Kalyan Cess. This is considered as one of the biggest tax reform in India since Independence.
Frequently Asked Questions - GST
- What is Goods and Service Tax ?Ans: The Goods and Services Tax (GST) is an integrated tax, wherein most of the existing indirect taxes such as Service tax, VAT, Cess etc (17 Taxes) have been subsumed into a single system of taxation. GST works on the concept of ''One Nation One Tax'' and will give single common national market.
- What are the benefits of GST?Ans: GST has all the ingredients to push the India's GDP growth as it will enhance production and the movement of goods and services across Indian states due to higher demand. GST will remove shortcoming of current indirect regime namely, multiplicity of taxes at central and state level, cascading of taxes, double taxation, lack of uniformity of state taxes and bring ease of doing business. It will provide equal playing field for business amongst various states. GST will be managed end to end through technology and will provide transparency and remove dependency of manual processes. This will have a positive impact on the prices of goods and services for most of the goods and services and ultimately provide benefit to consumers.
- From when is GST applicable?Ans: GST is implemented from July 1, 2017.
- Is GST applicable on the premium of all Insurance products?Ans: Yes, GST is applicable on all insurance products except few insurance products like the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) & Micro insurance product (Sampoorna Kavach Plan) in which the indirect tax exemption is continued.
- What is the rate of GST on Insurance Products?Ans: The effective rate of GST on Insurance products is as follows:
||Effective GST Rates
|Term Insurance Policy
|Unit Link Policy
||First Year Premium
||Subsequent Year Premium
|Single Premium Annuity Policy
- Is GST an additional tax to the existing taxes on Life Insurance Policy?Ans: No, GST is an indirect tax which replaces the current Service tax & Cess (Swachh Bharat Cess and Krishi Kalyan Cess) on life insurance premiums.