Owning a car is undoubtedly convenient, making travel more accessible and enjoyable. However, it comes with the responsibility of ensuring the vehicle’s safety through comprehensive car insurance. In India, purchasing car insurance is not just about safeguarding your car; it involves understanding the implications of Goods and Services Tax (GST). **
Importance Of Car Insurance:
Car insurance shields your vehicle from accidents, third-party liabilities, and personal injuries. In India, third-party insurance is mandatory, and non-compliance leads to fines. Comprehensive policies from insurance providers offer financial security against diverse risks, ensuring protection in unforeseen circumstances. You can use the Bajaj Allianz car insurance app to manage your policy on the go. Claims are subject to terms and conditions set forth under the motor insurance policy. *
GST And Its Basics:
Goods and Services Tax (GST) is an indirect tax system for selling goods and services. Introduced in India in July 2017, it replaced multiple levies, streamlining the tax structure. The GST Act encompasses Central GST (CGST), State GST (SGST), and Integrated GST (IGST) for transactions between states. **
Understanding GST Number:
A GST number, or GSTIN, is a unique identification number assigned to individuals or entities registered under the GST Act. It serves as a tool for tax authorities to monitor GST payments and compliance. Every GST-registered business must include the GSTIN on invoices.
GST Rate For Car Insurance:
The GST rate is a critical factor in car insurance. The applicable GST rate for four-wheeler insurance in India is 18%, representing a 3% increase from the pre-GST era. This change impacts the overall premium for car insurance. **
Impact On Car Insurance Premiums:
The shift from a 15% tax to an 18% GST rate has increased car insurance premiums. This 3% rise is directly transferred to the vehicle owner, resulting in a higher overall premium cost. For example, if the car insurance cost were ₹10,000 before GST, the premium would be ₹11,500. With an 18% GST rate, the premium becomes ₹11,800, reflecting a ₹300 increase. **
Incorporating GST Number In Car Insurance Policy:
Individuals often question including their GST number in their car insurance policy, which is crucial for GST returns. You can associate your four-wheeler insurance with a GST number by contacting the insurer’s customer service division. **
Claiming GST Amount And Filing Returns:
Despite higher premiums due to GST, policyholders can reclaim the GST amount by linking their four-wheeler insurance to their GST number. Contacting the insurer’s customer service ensures a streamlined process.
While introducing GST has streamlined India’s indirect tax system, it has also increased car insurance premiums. However, the higher costs often come with enhanced services and comprehensive coverage. Purchasing car insurance is a wise decision, providing financial stability in the face of potential damages to your vehicle. Claiming the GST amount becomes feasible by linking your insurance policy to your GST number and filing returns. In the ever-changing landscape of taxation and insurance, staying informed ensures you make informed decisions to protect your valuable assets. You can utilise a four-wheeler insurance premium calculator to estimate the prices of premiums to be paid. Claims are subject to terms and conditions set forth under the motor insurance policy. *
Get insured anytime, anywhere! Check out Bajaj Allianz General Insurance website to learn more and download the app now.
*Standard T&C Apply
** Tax benefit is subject to change in prevalent tax laws
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.
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.
