All of us have heard about the term GST as it is known as goods and service tax. A little background would enable you to understand things better. The GST was first introduced in the parliament so as to have a uniform tax structure across the country. It is a value added tax that would minimize the cascading effect on the indirect taxes when it comes to goods and taxes. When you have a uniform tax structure it is going to reduce the impact on other forms of taxes. Along with federal taxes, significant impact of GST on insurance has led a profound effect on individuals.
GST and how it is going to have an impact on goods and services
All the new structures came into effect in the year 2017. If this occurs all the federal and state taxes would be levied on goods or services like service tax, VAT, entertainment tax, luxury tax as it would be a single tax that is incorporated with a series of elements. It would fall into the domain of state GST and central GST. Both these taxes would be divided uniformly on to the GST slab. An anticipated rate of GST on health insurance is 18 %.
How it is going to have an impact on goods and services
Come GST implementation, the cost of goods would decrease and the services would like to increase. Hence an overall pressure on the customers would decrease significantly. Though the price of some goods like movie tickets, small wheelers would decrease, but when you are purchasing mobile phones and insurance premium is going to report an appreciation. Some of the exceptions to the GST bill includes alcohol, petroleum and tobacco products.
GST and their impact on the insurance sector
Yes GST is something whose impact would be felt across the entire sector. But you need to have an idea on how it is going to have an impact on the insurance sector as a whole. Firstly with the implementation of GST, the service tax would also become a part of GST. It is going to have a major impact on the premium since service tax would be having a major influence. Both general and life insurance policies will be having tax levied at the rate of 18 %.
A health insurance not only provides protection, but would provide you mental peace if any form of emergency strikes. Such a policy turns out to be a paramount asset when it comes to any other type of an asset. Hence most of the health insurance policies would provide a wide range of policies so as to cater to the needs of clients. Presently the service tax on a health insurance policy would be 15 %. But with the implementation of GST the service tax would be shooting up to 18%. It may lead to an overall increase in the cost as well.
Be it a health or a life insurance policy it is going to have an impact when it comes to the renewal period. Most of the policy holders end up renewing their policy after a year or two. Hence in such cases the premium would be having a major impact on the overall cost.
How GST is going to have an impact on the insurance policy
Though GST is going to have a major impact on a health or a life insurance policy. Among the insurance players it is going to create competition. So as to attract the buyers an insurance company would be lowering down the premium by trimming down expenses relating to policy issue or other factors that would be reducing the cost of a policy.
It is going to enhance the service levels when it comes to purchase of insurance policy and the claims. So it would be a great news for all the buyers who tend to ignore other factors and pay due attention to pricing when you purchase insurance plans. A point to consider when you are choosing an insurance plan the cost of premium should not be the only point to consider. Be it any form of insurance life , health or motor car it needs to provide protection to your life. This is going to be against any form of unwanted events and the varied role that the company may provide when it comes to policy tenure or claims.
Care health insurance is a policy that you need to opt. A reason for the same is that it provides a comprehensive coverage when it comes to the needs of your health. Coming to GST, an insurance company would make their products better, by enhancing quality of services, and would go on to enhance the customer buying experience.