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Impact of GST on Life Insurance Sector

February 17, 2017
Goods and services tax (GST) will be implemented from 1stJuly 2017 and it will revolutionize the way indirect taxes work. All types of indirect taxes like central excise, value-added tax (VAT), service tax, and others will be replaced by GST.

Need for GST

The liability of indirect taxes is transferable, unlike direct taxation where there is no transfer of liability. For example, when a shopkeeper levies VAT, it is transferred to the buyer and this increases the cost of the product which the customer has to bear. After GST is implemented, this cascading effect of multiple taxes will be eliminated. GST’s implementation will also make it easier to compute the taxes to be paid and it will streamline the whole process of taxation.

Impact of GST on life insurance

Policyholders currently pay 15% service tax on the premium amounts. Due to the impact of GST, the premium is likely to increase as there is a higher tax rate of 18%.

However, you must keep in mind that safeguarding your life and the lives of your family members is of utmost importance. This is especially true, if you are the only breadwinner in the family, then securing the financial future of your family with life insurance becomes crucial. Therefore, it is imperative that you secure your loved ones irrespective of the effects of GST on life insurance premium.

Life is uncertain and you would not want your family to undergo financial distress in case of a tragedy. Therefore, it is recommended that you avail of life coverage for the security and well being of your loved ones.

The security of loved ones in case of an adverse event plays an important role in making the right decision. Therefore, it is recommended to compare various policies offered by different insurers to make the right choice.

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