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GST to impact premium of life insurance and general insurance policies

GST to impact premium of life insurance and general insurance policies
Goods and Services Tax (GST) Act has been announced and will come into effect from 1 July. These will replace all applicable indirect taxes. Now, while some goods and services will get cheaper, some are set to get taxed more.

The GST council has suggested an 18% tax rate for the financial services sector, which would mean a direct impact on the premium paid by the policyholder. Current tax rate on insurance premium is 15%. Consequentially there would be an increase of 3% for all policyholders.

This means that if your term insurance policy premium is Rs.10,000, then you could have to shell out an additional Rs.300 post 1 July. Similar will be the impact on Unit Linked Insurance Plans as the GST goes up by 3% from 15% to 18%. 

Traditional insurance savings plans or Endowment plans, which currently attract a service tax of 3.75% on the premium in the first year of the policy, will increase to 4.5% in the first year of the policy under the new tax regime. Second year onwards, it will rise to 2.25% from the current 1.88% service tax under the new GST act.

Car & Two Wheeler Insurance premiums too will go up by 3% on 1st July, 2017. If your renewal is due in next 45 days, buy now to avail the lower rates. Click to compare premiums for your car or for two wheeler now.

If you were planning to buy Health Insurance for your family you should look at buying the plan before 1st July and save on your premiums.

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