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The Goods and Services Act has been one of the biggest tax reforms in India. GST had a huge impact on various industries and the impact on the auto insurance industry especially the two-wheeler insurance market has been quite fruitful.
Impact of GST on the Two-Wheeler Insurance Market
With GST, the tax implications have become quite simple to understand. Ever since GST has come into the picture, all the taxes have been categorized under one umbrella, and there is a single tax that is levied on the base price.
The GST council has set the tax rate of 18 percent for the motor insurance industry. There has been a 3 percent hike in the two-wheeler insurance market rates. And this revised rate is passed on to the customers in the form of an increased premium cost. Though, it will not make much difference in the prices.
Two-wheeler insurance plans are of two types- third-party insurance and comprehensive insurance. Third-party insurance is the basic insurance policy and it is mandatory to have at-least a third-party cover as per the law. Whereas a comprehensive insurance policy ensures a greater scope of coverage and includes the third-party cover as well.
However, the cost of the premium for a comprehensive two-wheeler insurance policy is higher in comparison to a basic third-party two-wheeler insurance policy.
After GST, the premium on a two wheeler insurance policy will be 18% flat, which was 15% previously. And it is applicable to all the general insurance products such as car & bike insurance, health insurance etc.
It will trigger competition among the insurers and thus the competitive prices will be offered to the customers.
Understanding The Impact of GST on the Two Wheeler Insurance Market
A comprehensive two-wheeler insurance policy is preferred by people owning an expensive vehicle or who want complete protection against road mishaps. Apart from other benefits, it offers third-party liability cover as well. The premium for a comprehensive policy is higher than a basic liability policy.
With a 3 percent increase in the cost of the premium, the consumers might get shifted to a basic two-wheeler insurance policy. However, a comprehensive cover is recommended to safeguard both yourself and the third-party. The extent of the coverage and the add-on benefits such as roadside assistance, zero depreciation cover and the likewise, should be your criterion to decide the policy type.
The underlying truth is that you need two wheeler insurance because you never know what unfortunate circumstances may come your way. Not all of us would have funds to cope with an accidental emergency. Therefore, having a two-wheeler insurance policy is important.
It offers financial backup and mental peace in case of a road mishap. Thus, an increment of 3 percent should not stop you from buying an extensive bike insurance cover.
The positive side to an increased rate in the premium of two-wheeler insurance market is that all the competitors would now release strategies and plans with more significant benefits to compete for the consumerg with the pr
Overall, it will call for more substantial research from the end of the policyholder and will help them in streamlining their finances better.
Impact of GST on Two-wheelers
The revision of the tax rates on two-wheelers is in favor of the mass market.
After the GST rollout, the taxes on bikes and scooters have been segmented based on the engine capacity.
Bikes and scooters with an engine capacity of lesser than 350cc is will be paying a GST of 28% as compared to 30% previously.
And two-wheelers with more than 350 cc of the engine capacity will now be paying 31 % GST, which is 1% higher than before.
In a Nutshell
Even though the rates have been revised, it is always recommended to buy a comprehensive policy for yourself so that your near and dear ones are not running from pillar to post in order to arrange funds after an accident.
For many of us, buying a two-wheeler can be an expensive affair and if we add maintenance cost to it, it does take a substantial amount out of our pockets. However, we cannot add another expense to our list by spending all our savings for the refurbishing of a two-wheeler when there is an accident. For this reason, it is advisable that you buy a comprehensive two wheeler insurance policy. Also, with the number of insurance products available in the market; you can buy the one that suits you the most.
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