Long pending GST Bill was finally passed in Lok Sabha on 8th of August 2016.┬аGoods and services tax (GST) is a revolutionary reform for the Indian economyтАЩs indirect tax regime. After the GST there are many changes in indirect taxes including service tax on Insurance.
It’s more likely that the tax on insurance will fall under 18% category; this will increase the service tax rates on insurance from 15% to 18% and may be effective from 01/07/2017.
New Rates of Service Tax on Insurance after GST ┬аwill be
Due to different types of the insurance products like term plans and other saving linked insurance plans like Endowment plans and money back plans service tax rates on insurance premium are different according to the product. New rates applicable will be given as follows:
When will be new rates of ST effective?
The new rate of GST will be effective from 01/07/2017 after the notification of the finance ministry in this regard. Each insurance company will issue separate circular regarding the increase of taxes on the insurance premium and may notify the policyholder with different means.
Will it affect all the policies, old or new?
No, it will not be applicable to all the policies. Premium in the policies which were earlier issued without separate service tax will be same. But, policies which were issued with separate servic├л tax, the premium will increase after the notification of new GST rules.
Service tax exemption will continue on following insurance scheme.
- Janashree Bima Yojana (JBY)
- Aam Aadmi Bima Yojana (AABY)
- Life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of fifty thousand rupees
- Varishtha Pension BimaYojana
- Pradhan Mantri Jeevan JyotiBimaYojana
- Pradhan Mantri Jan DhanYogana
- Pradhan Mantri Vaya Vandana Yojana (PMVVY); and
- Any other insurance scheme of the State Government as may be notified by Government of India on the recommendation of GSTC
There are many other Insurance schemes which are exempted from tax, to know the details of all the GST rates on services Click Here