Can We Add GST Number to Our Commercial Vehicle Insurance Policy?
Whenever you purchase a product or a service, you have to pay Goods and Services Tax (GST) on it. Similarly, when you buy a commercial vehicle insurance policy, you pay the applicable GST on your policy. So, if you wonder whether you can add a GST number to your commercial vehicle insurance policy or not, then here is the answer.Read more
What is GST?
Goods and Services Tax or GST is a type of indirect tax that is applied to 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 March 2017. 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 , 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 12 percent to 28 percent for passenger or goods carrying vehicles.
In addition to this, you do not just require to pay GST while buying a vehicle, but also at the time of buying a commercial 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.
Impact of GST on Commercial Vehicle Insurance Premium
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.
For instance, if your commercial vehicle insurance premium is Rs. 10,000 and the GST rate on it is 18%, the amount of premium to be paid by you will be Rs. 10,000 + Rs. 1800 (18% of 10,000)= Rs. 11,800.
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. All, in all, having a commercial vehicle insurance policy is a mandatory purchase and you are required to pay an increased premium (inclusive of GST) to your insurer.
To get an affordable policy for your commercial vehicle, you can also check quotes of the best commercial vehicle insurance companies on Policybazaar.com and choose a plan that suits your budget.
Is it Possible to Add a 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.
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