Hyderabad: Insurance premiums will get costlier with the rollout of GST from July 1. An average family with life, health and car insurances can expect to be burdened by an additional 3 percent insurance premium with the tax rate increasing from the existing 15 percent to 18 percent after GST gets operational.
Both the existing and the new policyholders will face increase in the premium amounts due to increase in tax rates. There are three types of life insurances.
The first one comprises of term insurance plans, which are basic life insurance policies. The second one is essentially ULIPs, which cover insurance and investments under a single integrated plan and the third covers endowment policies, which include money-back, life insurance policies that pay a lump sum on maturity or death, or a fixed sum every month like a pension.
At present, 15 per cent service tax is being collected on the premium. But under GST, they will be placed under the 18 per cent tax slab. However, life insurance schemes provided by the government have been exempted from the GST. Cooperative housing societies too will also come under GST, which was not the case earlier.
The GST Council has fixed 18 per cent tax on co-operative housing societies that either collect Rs 5,000 per month from a member or Rs 20 lakh and above as the total annual maintenance collected from all its members.
