Impact of GST on Two-Wheeler Insurance

The Goods and Services Act of 2017, commonly known as GST, is one of the biggest tax reforms in India. It categorises all the taxes under one umbrella and there is a single tax that is applicable on the base amount. Ever since GST has come into the picture, the tax implications have been made quite easy to understand.

Also Read: Own Damage Two Wheeler Insurance

Coming to the two-wheeler insurance industry, there is a tax rate of 18% set by the GST council, that is after a 3% hike in the previous rates. Though a 3% hike will not make a huge difference, the customers will have to purchase two-wheeler insurance policies at increased premiums. See the table below to understand the impact better:

Note that the GST is applicable on the entire premium.

Understanding the Impact of GST on Two-Wheeler Market

The act will have a magnitude of implications on several sectors including the two-wheeler insurance sector. It will reflect a significant change in the central and state tax structure. Before the implementation, there were various other types of taxes that many did not even know about. It will cut down several taxes as well as simplify the taxation system of India.

Also Read: Two Wheeler Insurance Add-ons

There are three types of two-wheeler insurance policies, namely third-party two-wheeler insurance policy, standalone own-damage two-wheeler insurance policy, and comprehensive two-wheeler insurance policy. A comprehensive policy is purchased by people who own expensive two-wheelers and want complete protection in case of a mishap. A comprehensive policy not only provides you the mandatory cover, but offers you protection against theft, loss, and damage of your own vehicle. It is comparatively more expensive than a third-party two-wheeler insurance policy.

Due to the increased premium cost, the customers might make a shift from comprehensive two-wheeler insurance policies to third-party liabilities only policy. However, it is recommended to not select a two-wheeler insurance policy only on the basis of premium. A comprehensive policy, irrespective of high premium, is a more useful policy for riders. Not only because of numerous coverage benefits, but it also offers several add-on covers that offer even greater protection.

However, looking at the brighter side of the increased GST, it is expected to trigger a competition between the insurance providers. This will result in competitive pricing as well as greater benefits offered by the insurer in the coming days. This way, the GST implications are sure to affect many lives thereby influencing the way you plan your finances.

Impact of GST on Two-Wheeler Vehicles

The impact of GST rates does not cease to the insurance sector only, but also expands towards the two-wheeler market as well. The revision of the GST rates on two-wheelers is in the favor of the market only. After the GST roll out, taxes levied on motorcycles and scooters now been segmented on the basis of their engine capacity:

• Motorcycles and scooters with an engine capacity of less than 350 cc will be paying a GST of 28% in comparison to 30% previously.
• Two-wheelers with more than 350 cc of the engine capacity will now be playing 31%, which is 1% higher than before. 

Also Read: Bike Insurance Details by Registration Number

Takeway

Having a two-wheeler insurance policy is a must as you never know which unfortunate circumstances you might have to go through while driving on the road. And a premium hike of 3% should not stop you from purchasing an extensive cover. However, to streamline your finances better, research is recommended before deciding on a two-wheeler insurance policy.

You can take help from the customer care executives at InsuranceDekho in case of any issue or if you are unable to decide which two-wheeler insurance policy is best for your vehicle.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

Types of Bike Insurance You Should Know:

Third Party Two Wheeler Insurance

Comprehensive Two Wheeler Insurance Policy

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.