The Goods and Services Tax (GST), which will bring uniform tax rates throughout the country, will be implemented soon. As a part of the tax net, the consumer will be impacted with its advent. With cost of health cover already on the rise, the premium for other insurance types is also likely to increase under the GST regime.
The Government has already announced that the tax rate for insurance will be increased from the current 15% to 18%. This is the immediate impact that GST would have on the insured, as the extra cost will have to be borne by the customers.
While some businesses will be getting the advantage of input tax credit, which will help them cut down costs, the general insurance sector is unfortunately not one of them. According to Gopal Balachandran, Chief Financial Officer, ICICI Lombard, "The government has continued with the existing exemptions under the GST regime. When there are exemptions the entire value chain of credit gets lost."
Health insurance and motor insurance are the sectors that will be impacted the most as they have large volumes. The premiums on health insurance policies in particular have soared recently with a single family spending more than ₹20,000 on it alone. Post GST, that outgo will increase further by 3%.
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