GST: Shocker for insurance sector, premiums to go up
DSIJ Intelligence / 20 May 2017
With the implementation of the GST tax, insurance sector will be liable to pay a tax of 18 percent on the services offered by the industry, as announced by the GST Council with a repercussion on the premium rates which are paid by the policyholders.
With the implementation of the GST tax, insurance sector will be liable to pay a tax of 18 percent on the services offered by the industry, as announced by the GST Council with a repercussion on the premium rates which are paid by the policyholders.
The GST tax rates for insurance sector is uniform with the rates across the financial sector. While the hiked rates for the insurance sector, which is likely to be passed on the customers immediately, will constitute commissions as well as the taxation.
Earlier, the customers were liable to pay a tax of 15 per cent on the insurance premiums on an average, which also included cess and service tax.
The new rates under GST will be imposed on all the insurance products bought or renewed post the implementation of GST on July 1, 2017, resulting in a higher premium rate.
Life Insurance Corporation of India (LIC), is likely to face the taxation brunt the most as it has the largest number of policyholders in the country.
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