No clarity on how cos will get input tax creditrrthe goan I networkrPANAJI rrThe reason for this is simple. Till now, insurance, being a service, is taxed at 15%. But, with the advent of GST at 18%, there is likely to be 3% additional tax burden on insurance policies, which means the premiums will become more expensive. rThis includes all kinds of insurance policies viz. life insurance, general insurance, unit-linked-insurance-plans (ULIPs) and also endowment policies. rSandip Bhandare, prominent chartered accountant, said, “Yes, insurance premiums will become expensive. This is because GST @ 18% will be more than the prevailing service tax @ 15%.” rIt also appears that there is no way for people to escape the higher payment of insurance premiums once the GST is rolled out. The premiums on such policies are paid typically once in a year, depending upon when they are due. rIs there a way for people to still pay lower premium on insurance policies? Talking on this, Bhandare said, “Insurance companies give a time-frame of few days to people to pay their premium. If premium is falling due in July, people may choose to make advance payment in June itself. But, we don’t know whether the insurance companies will later charge the differential amount. In that case, making advance premium payment will be futile.” rMost experts are of the opinion that premiums will go up in the short run. In fact, they said that premiums can increase by straightaway 3%. Though, there is a possibility that insurance companies may get the benefit of input tax credit, which they might pass on to people. rBut, at the moment, there is no clarity as to how insurance companies will get input rtax credit.
In GST regime, get set to pay high insurance premiums
As the Goods and Services-Tax (GST) is set to roll out from July 1, people should be prepared to pay higher premiums on their insurance policies than they were paying earlier.
