GST has been the talk of the nation ever since it first appeared on the news. Being a universal, value-added, goods and services tax for the whole nation, it is meant to eliminate the double taxation currently occurring on the cost of goods and services. It is applicable to the supply of goods and services from manufacturer to end consumer, drastically reducing chances of fraud and corruption, with respect to tax.
GST came into effect on July 1 this year. It taxes goods and services at rates of 0%, 5%, 12%, 18% and 28%. Different sectors have been affected differently by GST. Lifestyle and home appliances, beauty and personal care products, etc. have become more expensive, while automobiles, consumer goods, etc. have become cheaper. The insurance sector falls under the higher tax slab and hence has become more expensive.
Before GST was launched, insurance was taxed at 15%. However, under GST the tax rate went up to 18%, increasing the cost of premiums by 3%. As general insurance premiums are taxed on the entire premium amount, this is a significant increase. General insurance includes motor insurance, health insurance, travel insurance, home insurance and so on.
Motor insurance policies are those you buy to insure your vehicle. They are basically of two types – comprehensive Motor insurance and third party motor insurance. A comprehensive motor insurance plan covers third-party liabilities (loss of property or injury by your vehicle to a third-party) and any damage done to your own vehicle. Third party motor insurance meanwhile, covers only third party liabilities caused by your vehicle.
A health insurance policy will cover you and your family (depending on the type of plan) against medical expenses arising due to hospitalisation. You can then simply focus on getting better without worrying about hospital bills.
The increase of the cost of premium, does make insurance more expensive than before but the security and peace of mind that comes with insuring your life and properties, is priceless.
Source: Rediff
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