Can We Add GST Number to Our Commercial Vehicle Insurance Policy?

The vehicles that are used for commercial purpose like if you are using your vehicle for business purpose, it comes under the category of commercial vehicle. Same as personal vehicles, it is mandatory to insure your commercial vehicles. Whenever you purchase something, you have to pay Goods and Services Tax (GST) on it. Similarly, when you buy an insurance policy, you pay applicable GST. So, if you wonder whether you can add a GST number to your commercial vehicle insurance policy or not, then here is the answer.

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What is GST?

Goods and Services Tax or GST is a type of indirect tax that is applied on the sale of services and goods throughout India. It is a integrated system of indirect taxes as a replacement of as many as 17 indirect taxes for example Value Added Tax (VAT), Central Sales Tax (CST), service tax, central excise tax, luxury tax, etc., levied by the state and central governments.

The GST came into the picture after the Goods and Services Tax Act was passed in the Indian parliament in 2017 March. Since July 2017, any tax that is levied by the state or central government upon the sale of services and goods is converted to GST.

There are two components in GST – SGST and CGST. On one hand where SGST is State GST that is taken by the state government upon the sale of goods and services. On the other hand, CGST is Central GST, which is the sales and goods tax collected by the Central government. Additionally, the central government as well collects Integrated GST or IGST, if the exchange of services and goods happens between the states.

According to the GST Act, fixed rates of tax are followed upon the sales of goods and services. For instance, you have to pay a GST of 28% at the time of buying a car for personal use.

In addition to this, you do not just require to pay GST while buying a vehicle, but also at the time of buying a vehicle insurance policy.

Applicable GST on Commercial Vehicle Insurance Policy in India

Every commercial vehicle insurance attracts Goods and Services Tax (GST) as you are purchasing a service. However, the amount of GST is included in your insurance policy's premium.

Currently, the applicable GST on your commercial vehicle insurance policy is 18%. This percentage is 3% higher than the pre-GST time when different indirect taxes were applicable. At that time, approximately 15% tax was applied on the commercial vehicle insurance policy, which contains 14% of the service tax and 0.5% of each Krishi Kalyan Cess and Swachh Bharat Cess.

However, does this increase in the tax for your commercial vehicle insurance impact the premium?

The answer is yes.

GST’s Impact on the Premium of Commercial Vehicle Insurance

Since the applicable tax increases on the commercial vehicle insurance policy approximately by 3% due to GST, it does impact its premium. The vehicle insurance providers pass this increase in tax to the vehicle owners. Resultantly, this hike of 3% in the amount of tax has increased the overall amount of premium of the commercial vehicle insurance policy, which a commercial vehicle owner has to bear.

However, as compensation for this extra tax, the insurance companies offer additional coverage advantages and benefits. For example, some commercial vehicle insurance providers offer roadside assistance services as a part of your basic insurance policy and not as an add-on.

Is It Possible to Add GST Number to Your Commercial Vehicle Insurance Policy?

A GST number is a 15-digit number that is allotted to every person who is registered under GST. This number is as per the PAN number and you can use it to file your returns of GST.

The GST number is generally obtained by businesses, suppliers, and dealers who are eligible to pay taxes. If you have a GST number, you can easily claim returns for the GST that you have paid.

Moreover, you can add a GST number to your commercial vehicle insurance policy. All you have to do is to contact the customer support of your car insurance provider or insurance broker for getting the GST number added to your car insurance policy.

Summing It Up!

GST has made the complete system of indirect tax unified and simple. However, when we talk about commercial vehicles insurance, the insurance premium has increased due to GST. The only good part about the introduction of GST in commercial vehicle insurance is,  you can claim the paid GST amount by filing a GST return. So, if you have a GST number, you must get it added to your commercial vehicle insurance policy for filing your income tax returns. This is probably the best thing with the GST that you have paid with your commercial vehicle insurance premium

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