GST on Insurance: Impact on Insurance Premium

GST: Learn about Goods and Services Tax

As you may be aware, the Goods and Services Tax (GST) has replaced all indirect taxes like Service Tax and Cess from July 1, 2017. The introduction of the GST by the Government of India is a significant step in implementing a uniform indirect taxation system in India.

Details of GST rates that will be applicable are mentioned below:

Product Type	Applicable on	GST (July 1, 2017 onwards)
Term Policy	Premium payable	18%
Unit Linked Insurance Policy	All applicable charges	18%
Riders	Premium Payable i.e. Accidental Death Benefit Rider	18%
Health Insurance Policy	Premium Payable	18%
Endowment Policy	First Premium	4.50%
Endowment Policy	Premium Payable i.e. Regular Premium	2.25%
Single Premium Annuity Policy	Premium Payable	1.80%

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Answers to commonly asked questions on GST

1. What is the Goods and Services Tax?

The Goods and Services Tax (GST) is an integrated tax, merging most of the existing indirect taxes such as Service Tax, VAT etc into a single system of taxation. GST works on the concept of “One Nation One Tax”. This is one of the biggest tax reforms in India since Independence and has been implemented since July 1, 2017.

2. What are the benefits of GST?

Implementation of GST is expected to reduce costs substantially, especially in the manufacturing sector, the benefits of which could cascade into other sectors in the long run. It is also anticipated to bring in more transparency, automation and simplification in tax compliance.

3. From when will GST be made applicable?

GST has been brought into effect from July 1, 2017.

4. Is GST payable on the premium of all my Insurance Policies?

Yes, except for insurance plans like the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Micro Insurance and NPS sourced through NSDL mode which is exempted as per the GST Act.

5. Is GST applicable only on Insurance Policies?

No, GST is applicable for all goods and services except those which are specifically exempted.

6. Is GST in addition to the existing taxes I am paying on my Insurance Policies?

GST is an indirect tax which replaces the current service tax & cess on premiums.

7. Will I have a view of the GST component I am paying in my Premium?

Yes. The details of GST paid by you on premiums would be disclosed separately on the premium receipts given to you.

8. If I pay my premium in advance, will GST still apply to me?

If you are paying the premium for a policy for which the premium is overdue or due for payment till June 30, 2017, then GST will not be applicable to you.

If your policy premium was due for payment on or after July 1, 2017, then GST will be applicable on your premium. In case you paid the premium in advance, the balance amount due if any, on account of GST will have to be paid after the GST implementation date.

Disclaimers

^{^}Tax benefits may be available as per prevailing tax laws. Tax benefits under the policy are subject to prevailing conditions and provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per applicable rates. The tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details

Comp/doc/Jan/2018/0761