Articles

How does GST apply on LIC Life Insurance Policy?

by Legal Salaah Business Registration Solutions in India

Introduction

On 1 July 2017, one country, one tax i.e. goods and services tax came into force. India's biggest fiscal reform since Independence impacts all sectors and everyone. Even companies like LIC requires GST registration online. LIC and other insurance premium such as health plans, endowment plans, insurance policies, etc. have hike up a little in terms of GST. Let us learn about this in details in the other half of this article.


What is the hike rate difference?

By 15% service tax to 18% of GST, the term, health insurance and ULIP fees have increased. The first-year premium in Annuity Plans was used as a 3.75 percent tax rate, which has now been adjusted to 4.5 percent GST for NB premium of the life insurance and pension plans (including the single premium).

Initially, the renewal rates were 1.875% Service Tax, which is now set at 2.25% GST. Finally, the service tax which was 1.5 percent for the single premium annuity plan previously, now being replaced by 1.8 percent GST.

All of these reforms will now have a mild effect on all of us, but most of our investment will be influenced by the middle class as LIC's term plans are more important than any other type of investment.

For the middle class relief, the government has continued few LIC plans as exempted under GST just like they were earlier exempted from Service Tax prior to 1st July 2017.

The following plans are exempted from getting GST Registration Online:


  • Janashree Bima Yojana (JBY)

  • Pradhan Mantri Vaya Vandan Yojana;

  • Varishtha Pension Bima Yojana;

  • Aam Aadmi Bima Yojana (AABY);

  • Pradhan Mantri Jeevan Jyoti Bima Yojana;

  • Pradhan Mantri Jan Dhan Yojana;

  • Any other State Government insurance scheme as provided by the GST Council

  • Life insurance policy licensed by IRDA with a maximum coverage of Rs. 50,000




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About Legal Salaah Innovator   Business Registration Solutions in India

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Created on Dec 26th 2019 03:15. Viewed 424 times.

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