How to Add GST Number To Your Bike Insurance Policy?

Posted on: Sep 23, 2022 | | Written by:

How to Add GST Number To Your Bike Insurance Policy?

Published on September 21, 2022. EST READ TIME: 3 minutes

Planning to buy a two-wheeler? Apart from deciding on the right manufacturer and model, you must also purchase the right insurance for your bike. The Motor Vehicle Act of 1988 mandates all vehicles to have valid insurance on them at all times. However, it requires you to have only a third-party liability policy. For your bike insurance renew, you must opt for a comprehensive insurance plan and not a third-party liability policy.

Buying just the third-party liability policy is enough to tick all the boxes and let you ride. However, it offers financial protection in the event of an accident involving a third-party individual, property, or vehicle. If there were anything to happen to your bike during the incident, the policy does not cover that scenario.

Thus, it is advisable to opt for a comprehensive plan, that offers more exhaustive coverage for your bike. It offers statutory third-party liability cover and protects your bike as well. Any damages due to natural calamities such as earthquakes, floods, cyclones, typhoons, etc., or damages due to riots, strikes, vandalism, etc. are covered as a part of the plan.

Irrespective of which type of policy you buy, you must pay GST on the premium amount. And the final amount that you pay to your insurance provider includes the policy premium and GST.

If you are wondering what is GST and how it impacts your policy, here are all the details that you might need regarding GST.

GST – Goods & Service Tax

GST stands for Goods and service tax, and it is an indirect form of tax that is applicable to all the goods and services sold in any part of the country. The introduction of GST has replaced about 17 other indirect taxes that were levied earlier. Some of the taxes that GST has replaced include the VAT or Value Added Taxes, central excise duty, central sales tax (CST), etc.

The new tax regime came into effect on the 1st of July 2017, after the Goods & Service Act was passed in the parliament. GST has two different components, namely CGST and SGST. CGST stands for Central GST and the taxes are collected by the central government.

Whereas the SGST or the State GST taxes are collected by the state governments. In the event, that goods or services are exchanged between different states, the central government collects IGST or Integrated GST.

There are different tax slabs and the GST council regularly evaluates which goods and services would fall into the respective tax slabs. The different GST tax rates are 0%, 5%, 12%, 18% and 28%.

GST On Bike Insurance Policies

Since insurance is a service that is being provided, it falls under the GST regime and you must pay applicable taxes. Every time you opt for bike insurance renew applicable GST will be added to the insurance premium before you proceed with the payment. The final premium amount that you pay, is inclusive of the GST amount.

Currently, the GST on bike insurance premiums is set at 18% as opposed to the 15% taxes that you had to pay prior to the introduction of GST. The earlier taxes included 14% of service taxes and 0.5% of Swachh Bharat Cess and 0.5% of Krishi Kalyan Cess.

Impact of GST on Bike Insurance Policies

The introduction of GST has increased bike insurance premiums by a very small margin. The GST amount is directly passed on to the customers by the insurance companies. Thus, the increase in 3% of taxes is born by the policyholders.

Let us take an example and see how GST has impacted the policy premiums. On bike insurance renew if the premium is Rs. 6000, as per the old tax regime, the applicable taxes were 15% on the policy premium. Thus, the taxes would amount to Rs. 900 and your total policy premium would be Rs. 6900.

If you consider the 18% taxes of GST, the total liable taxes would be Rs. 1080. And that would make the total policy premium to Rs. 7080. The difference in price for this example comes down to Rs. 180. This shows that the introduction of GST has had a small impact on bike insurance premiums.

However, some insurance providers have decided to provide additional benefits to compensate for the increase in policy premiums. Thus, some of the policies include complimentary roadside assistance along with the base policy.

Can You Add GST Number To A Bike Insurance Policy?

Whether you can add a GST number to your bike insurance policy is a question that a lot of individuals have. GST number is a unique 15-digit number and the same is allotted to all the individuals and entities that are registered under Goods & Service Tax. The GST number is usually based on the PAN of the individual and you can use the GST number to file a return. Usually, people running businesses get GST numbers. These businesspersons are eligible to get a GST number and claim for a GST return as well. Now to the part, about whether you can add your GST number to a bike insurance policy, the simple answer is Yes. After you purchase your bike insurance, you can reach out to your insurance provider and ask them to add your GST number to the policy document. They will oblige and update the GST number.

Buy The Best Bike Insurance Policy

If you wish to secure the best bike insurance policy for your bike, it is highly recommended to compare various policies. You can compare different policies with the help of insurance aggregators. When you compare different policies, you get the best of both worlds. A policy that offers the maximum coverage for your bike, without putting a dent in your finances.

Another advantage of buying a policy online with the help of aggregators is that you can instantly see the impact of different parameters on the policy premiums. If you add a rider to your policy, you can instantly see how it impacts your premium. Also, you can expand the total premium to see the GST components before you pay the premiums.

Conclusion

With the introduction of GST, indirect taxes have been simplified to a great extent. Gone are the days when one had to pay several different taxes. Now you simply need to pay GST. For every bike insurance renew since 2017, one has to pay GST on the total premium of the policy. Though the bike insurance renew premium has seen a small bump in price, it should not deter you from renewing your policy. Riding your bike without a policy can have a lot of adverse effects.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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