Can You Add GST Number To Your Bike Insurance Policy?
You need to invest a big amount of your savings to purchase a bike. When you bring the bike to your home, it comes with a responsibility. A responsibility to protect your bike from any unforeseen incident that can cause damage because you can never know when an accident or a natural calamity might occur. To protect your bike from such sudden incidents you have to purchase a bike insurance policy.Read more
A two-wheeler insurance policy provides financial protection to the owner of the bike from such unforeseen incidents. However, it is necessary for the bike owners to have a third-party liability insurance policy as per the Motor Vehicle Act 1988 but it is recommended that they should also purchase a comprehensive insurance plan. It is because a third-party liability insurance plan only provides financial protection against third-party liability but a comprehensive plan provides cover to the bike owner, third party as well as for natural calamities, theft, etc.
When you purchase something, you have to pay the Goods & Service Tax (GST). Just like this, when you purchase a bike insurance policy, you have to pay the GST on it.
Now you must be thinking that how much GST would apply to your insurance policy. We are here to tell you that. But first, let us explain to you a little bit about GST.
Goods & Service Tax (GST)
GST is a single indirect tax that is levied on the sale of goods and services sold across the country. GST replaces around 17 indirect taxes is a unified system to indirect taxes. It has replaced the Value added tax (VAT) central sales tax (CST), central excise duty, etc. that used to be levied by the state and central government.
On July 1st, 2017 GST came into effect. The Goods & Service tax act was passed in the parliament in March 2017. CGST& SGST are the two parts of GST. CGST is the tax amount collected by the central government and SGST is the tax amount collected by the state government. The central government also collects the IGST (Integrated GST) if the goods and services are exchanged between states.
GST fixed the tax rates on which the goods & services are sold. Depending on the type of goods & services you purchase there are included GSTs of 0%, 5%, 12%, 18 % ad 28%.
GST Applicable on Bike Insurance
Purchasing a 2-wheeler insurance policy attracts the GST because it is a service that you are purchasing. The GST is included in the premium amount. The insurance premium that you pay is inclusive of GST on your bike insurance.
There is an 18% of GST applicable on purchasing bike insurance. Before it was 15% when you had to pay separate indirect taxes. The 15% tax consists of 14% of service tax and 0.5% each as krishi Kalyan Cess and Swachh Bharat Cess.
But how does the increment in the indirect tax impact your bike insurance premium?
GST Impact on Bike Insurance Premium
The increment from 15% to 18% in the tax does not adversely impact the premium. The GST amount has been passed on to the bike owner by the insurance company. The hike of 3% in the tax has impacted the overall bike insurance premium which the bike owner has to bear.
Here Is An Example
Let’s say that your bike insurance premium is Rs. 5000. If you apply the old 15% tax on the premium that will be 750. Hence you will have to pay the bike insurance premium of 5750. But after the GST, when 18% is applied on your bike insurance of Rs. 5000 then you will have to pay that will be Rs. 5900. So now you will have to pay a total bike insurance premium of Rs. 5900. So the total increment in your bike insurance will be Rs. 150.
This is how you are paying a higher insurance premium after the inclusion of GST.
However, the insurance companies compensate for the rise in bike insurance premiums. They offer benefits and additional coverage. For example, some insurance providers offer roadside assistance services as a part of a basic policy.
Is It Possible To Add GST Number to Bike Insurance?
A lot of policyholders think if they can add their GST number to the bike insurance policy. It is a unique number of 15 digits. It is allotted to everyone who is registered under Goods & Service Tax. It is based on the PAN number of that particular person and it can be used to file a GST return.
A GST number is obtained by the people running businesses. These business persons are eligible taxpayers and they can claim return for the paid GST.
Now answering the question, is it possible to add GST number to bike insurance? Well, Yess
You can add the GST number to the 2-wheeler insurance policy. You just need to contact the customer care executive of your insurance company to get the GST number added.
The introduction of GST has made the whole taxation system more simplified and easy to understand. However, the 3% hike has increased the premium amount of the bike insurance policies. But you can claim the GST amount by filing GST returns. If you have a GST number then you can add it to the bike insurance policy to file returns.