GST Chronicles: UnravelingThe Impact Of Two-Wheeler Insurance

The Goods and Services Tax (GST) revolutionised India’s tax system by consolidating multiple indirect taxes into a unified structure. Two-wheeler insurance, falling under the services category, is subject to GST. This article explores the current GST rate for bike insurance, its effects on the market, and how customers are impacted.

GST on Two-Wheeler Insurance:

Before GST, vehicle insurance included excise duty, value-added tax (VAT), central sales tax (CST), and other taxes, with a tax rate of 15%. Under the GST regime, bike insurance premiums are now subject to an 18% GST rate.

Impact on the Bike Insurance Market:

The 18% GST rate represents a 3% increase from the previous 15%, affecting the premium for third-party bike insurance. Digital insurers operating online with a no-commission business model mitigate this impact by offering affordable plans through cost savings. ##

Insurance and GST in India:

Insurance in India encompasses various categories, including life and general insurance. While insurance premiums are not subject to income tax, GST is applicable due to the nature of motor insurance services.

Customer Impact of GST on Two-Wheeler Insurance:

To illustrate the impact, consider a pre-GST scenario where a Rs. 1,000 premium incurred a 15% tax, resulting in a total of Rs. 1,150. With an 18% tax rate post-GST, the total premium becomes Rs. 1,180. This increase reflects the influence of GST on two-wheeler insurance premiums.

Effectso On The Two-Wheeler Industry:

The GST impact on two-wheelers differs from insurance. Two-wheeler sales tax rates, previously at 30%, saw a reduction to 28% for engines under 350cc and an increase to 28% + 3% Cess (31%) for engines above 350cc.

Electric Bike GST Rate:

As of August 1, 2019, the GST rate for electric two-wheelers and electric vehicles reduced from 12% to 5%, promoting the adoption of environmentally friendly options.

GST on Old or Used Bikes:

The GST rate on used motorcycles and two-wheelers was 28%, aligning with that of new cars. This rate was later reduced to 12%, eliminating the previous cess.

Rates for Bike Insurance Policies After GST:

The GST rate for third-party bike insurance policies now stands at 18%, reflecting its classification as a service.

Adding A GST Number to Bike Insurance:

Entrepreneurs with a GST number can claim GST paid on insurance. Adding a GST number to your two-wheeler insurance policy requires contacting the insurer’s customer service for necessary amendments.

While the 18% GST on two-wheeler insurance represents a slight increase, opting for a Comprehensive Insurance Policy is crucial for extensive coverage. Digital insurers offer affordable plans, easing the impact of the tax component increase. Insuring your bike with online providers ensures competitive rates and a seamless online experience for policy purchase, renewal, and claims processing. Always make sure that you renew your motorcycle insurance on time.

Despite the tax adjustment, insuring your two-wheeler remains essential for comprehensive protection. Manage your insurance policy on the go using a Bajaj Allianz bike insurance app. *

 Get insured anytime, anywhere! Check out Bajaj Allianz General Insurance website to learn more and download the app now.

* Standard T&C Apply

## All savings are provided by the insurer as per the IRDAI-approved insurance plan.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.