Come July 1, consumers will have to shell out more money to pay their insurance premium. Insurance policies, including life, health and motor will be expensive, as taxes will go up by 3%.
“Currently, insurance premium attracts a service tax of 15% on its premium cost. With the implementation of the GST, the cost of purchasing the insurance will marginally increase as it will attract GST of about 18% on premium,” says Star Health and Allied Insurance Executive Director Anand Roy.
Explaining the impact of GST on the insurance sector, Aegon Life Insurance CFO Rajeev Chugh says, “Earlier, for Endowment insurance policies, the service tax including cess was 3.75%, which was collected from the customer and paid to the government or set-off against input credit available from services. Now, for Endowment insurance policies, the GST would be 4.5%.”
Experts say that the insurance industry has to manage the transition and complexities. “The indirect tax compliances would be decentralised, and hence, there would be a need to file returns as well as manage compliances in every state from the current situation where the industry files only a single centralised return and all tax compliances are fulfilled at a single location,” Canara HSBC Oriental Bank of Commerce Life Insurance Company CFO Gaurav Seth says.
From the current two returns (half-yearly and annual), every insurer would need to file 37 returns (three per month plus one annual return) per state.
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