Can You Add a GST Number to Your Car Insurance Policy?

The Goods and Service Tax is an indirect (single) tax used in the selling of products and services. It's a hybrid indirect tax system that changes 17 levies, including luxury tax, service tax, CST (Central Sales Tax), VAT (Value Added Tax), and central excise duty, among others. Both state and federal governments use these.

In March 2017, the GST Act was put forward by parliament and put into operation on 1 July 2017. Since then, every tax levied by the federal or state governments on the trading of products and services has been turned into GST.

Goods and Services Tax is further subdivided into SGST and CGST. SGST stands for State GST, and CGST stands for Central GST. Aside from that, the federal government amasses Integrated GST, commonly known as IGST. When products and services are traded between states, the IGST is levied.

A GST number, also known as GSTIN (Goods and Services Tax Identification Number), is a one-of-a-kind identification number granted to an individual or entity registered with the GST Act.

Tax officials primarily use the GSTIN to keep track of GST payments and dues for every individual and business registration with the GST Act. The GST number has superseded the previous taxpayer identification system, such as the TIN (Tax Identification Number). The state tax officials employed TIN because it aided in monitoring state tax data such as VAT.

All firms that were previously registered using systems like TIN have automatically been transferred to the Goods and Service Tax Identification Number system and have obtained their GST registration number (new). According to the GST laws, every GST-registered firm must have a copy of the GSTIN on every GST invoice issued to their clients.

Vehicle insurance GST rate is required when purchasing a vehicle insurance coverage since you’re obtaining a service. Nevertheless, because the vehicle insurance GST rate is added to your premium amount, you don't have to pay it separately. As a result, when you pay your auto insurance premium, you should know that it is all-inclusive.

An 18% vehicle insurance GST rate is levied when purchasing a four-wheeler insurance coverage. It is a 3 percent increase over the pre-GST era. Previously, a 15% fee was assessed on vehicle insurance policies. The service tax accounted for 14% of the 15%, while the Swachh Bharat Cess and Krishi Kalyan Cess accounted for 0.5%.

The rise in the applicable GST rate on car insurance from 15 percent to 18 percent GST negatively influences your premium. The Goods and Service Tax amount is passed to the automobile owner by the motor insurance company. As a result, the 3 percent rise in the tax amount has increased the overall auto insurance premium that the car owner must face.

Let's look at an example to see how this works:

Assume your auto insurance premium is ₹10,000. Before implementing GST on cars, a 15% tax was levied on your premium, which amounted to ₹1500. As a result, you had to pay a total auto insurance premium of ₹11,500. However, with the implementation of the GST Act, an 18% GST rate on car insurance premiums, that is, ₹1,800, has been imposed.

As a result, you must now pay a four-wheeler insurance premium of ₹11,800. In this case, your comprehensive four-wheeler insurance premium rises by ₹300. As a result, you are paying a hiked-up premium since implementing the GST system.

On the other hand, car insurance providers reimburse for the increase in auto insurance premiums by providing extra coverage and advantages. For example, several auto insurers now put forward roadside help standard coverage rather than an add-on.

Many consumers are unsure if they may attach their number for GST for vehicle insurance coverage. This number is derived from your PAN (Permanent Account Number) and is used to register GST returns. You may accomplish that by linking a GST number with your four-wheeler insurance policy. Then, you just need to contact the customer service department of TATA AIG. We will ensure that you are covered and get answers to all your queries.

The total direct tax system in India has been more straightforward and streamlined since the implementation of GST. The only issue after implementing GST is a hike in total four-wheeler insurance premiums. However, you may claim GST as soon as you complete the GST returns.

The things mentioned above are the most critical impacts of the GST on vehicle insurance coverage. The implementation of the GST Act simplified and harmonised the entire indirect tax structure.

However, it has resulted in a rise in the whole car insurance premium. While you may have to pay a higher GST on car insurance premium for necessary services, bear in mind that with higher prices come improved services that you did not previously have. Because of the high cost of vehicle insurance, it is not a bright idea to avoid buying car insurance. You should ensure it when you buy a car since it will offer you consistent financial stability if the vehicle's body or parts are damaged.

And yes, you may easily claim your GST amount by completing your GST returns. If you already have a GST number, you should attach it to your four-wheeler insurance plan to register your returns. Then, all you need to do is contact Tata AIG's customer care department to get things done quickly and efficiently.