The Impact of GST on Car Insurance Premiums

As per the Motor Vehicles Act of 1988, it is compulsory for every car owner to have a four-wheeler insurance plan. When you get this policy, you will be asked to pay a premium price. This premium price will include a goods and services tax which is regulated by the Central Government of India. It is a consumption tax based on the credit invoice method where the value addition at each stage is taxed. 

The GST rates for goods and services have been placed in four categories of 5%, 12%, 18% and 28%. GST on car insurance falls in the 18% category. The GST on car insurance premiums replaced the previous services tax which was levied at the rate of 15%.

Pre-GST 

The impact of GST is stated as follows:

• Increase in the premium price of the policy

• Increase in taxes by 3% as compared to pre-GST taxation

• Pre-GST taxation included 14% service tax, 0.5% Swachh Bharat cess, and 0.5% Krishi Kalyan cess

If you own a four-wheeler, you are required by law to own car insurance as well. The GST imposed on the premium of this car insurance is 18%. While this does increase your car insurance premium price, it is also a duty that every responsible citizen must fulfil. Moreover, getting car insurance can be very beneficial for you and your finances. 

Starting at just ₹2,094/year, four-wheeler insurance can come with perks like third-party coverage, personal accident insurance, add-on covers, cashless garage services, etc. This financial protection can help you in times of accidents, natural calamities, man-made disasters, and other eventualities. Hence, while GST on insurance when added to premium prices can seem hefty, the perks of getting car insurance are worth it. Explore a plethora of car insurance plans on Bajaj Markets to find your ideal policy.