GST on Insurance: At present, most people get insurance for the health and financial protection of their family. At the same time, a big change has been made in the GST rate by the government. Actually, the 18 percent GST on insurance policy has been made zero by the government. This simply means that your insurance will be cheaper than before. Meanwhile, news is coming that the premiums of insurance companies can be very expensive. In such a situation, the question in the mind of the common man is whether the insurance will actually be cheap or expensive. In such a situation, we explain to you in detail through this article how much the benefit will be.
Know what used to happen earlier?
Suppose your insurance premium was Rs 100, on which 18 percent GST was levied. This means that earlier you had to pay Rs 118. The company used to give 18 rupees to the government. The company had kept GST of Rs 5 on its expenses. In such a situation, the company used to get these 5 rupees, which is called ITC, i.e., Input Tax Credit. Customers had to pay 118 rupees, but the company got some relief.
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Know what will happen now?
In the new system, there will be no GST on the premium, which means only 100 rupees will have to be paid on a premium of 100 rupees. Customer expenses have reduced, but now the company will not get the ITC of GST given on its expenses. This means that those 5 rupees will now become the direct expense of the company.
Understand it like this through calculation
Suppose the premium of your policy is 20 thousand rupees. Earlier, 23600 rupees had to be paid with 20 thousand rupees, along with 18 percent GST. This means that 3600 more had to be paid. But now 20 thousand rupees will have to be paid. This will benefit the customers more. After this, even if the companies increase the price, you will be the one to benefit.
Suppose the policy price is 20 thousand rupees, but the company has increased it by 1 thousand rupees. As per the GST of 18 percent, 3600 rupees more had to be paid. Now you will not have to pay that. This means that despite the increase in the policy amount, you will benefit.
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Who will benefit how much
Let us tell you that customers will get direct benefits from zero GST on insurance. Now they will not have to pay 10 percent GST. However, insurance companies may suffer losses, because now they will not get ITC. They will bear this expense themselves or can gradually add it to the premium rates.
At the same time, the income of the government from GST will decrease, but according to the government, more people will take out insurance and there will be a huge benefit in the long run. This clearly means that customers will get a huge benefit from zero GST.