The GST (Goods and Services Tax) is the indirect tax introduced in India on 29th March 2017, thus replacing other indirect taxes like excise duty, services tax, VAT, etc. This tax is levied on the manufacture and distribution of the services and goods. It was one of the biggest tax reforms in India. This tax reform has also had a massive impact on the auto insurance industry, especially the two wheeler insurance market. Let us understand the impact of the introduction of the GST-based tax system on the two-wheeler market in India.
How does GST affect automobile insurance policies?
There are two types of bike insurance plans in India – comprehensive insurance and third-party insurance. Third-party insurance is a mandatory insurance policy that you are required to own by the law. The rates for third-party insurance are declared by the Insurance Regulatory and Development Authority of India (IRDAI) annually. These rates are based on the engine cubic capacity of the vehicle.
On the other hand, a comprehensive insurance policy promises much better coverage. It covers damages to the bike, theft of the bike, injuries to the owner, and it also includes the third-party cover. The rates for comprehensive cover are … Read the rest
The Insurance Regulatory and Development Authority of India (IRDAI) is responsible for the regulation of all types of insurance policies in the country, including two-wheeler and four-wheeler insurance. On 5th March 2020, the IRDAI had given vehicle owners due cause for worry by putting out a draft that proposed a hike in third-party premium rates for the 2020-2021 financial year.
In the draft, it was suggested that third-party motor insurance premium rates should be increased by 2-15% effective immediately from 1 April 2020. Bike and car insurance policy owners were left dreading this hike, as were all vehicle manufacturers in the country.
Thankfully, better sense prevailed, and in an order dated 27 March 2019, the IRDAI stated that the proposed hike would be deferred until further notice. So, what was the hike all about and why was it eventually put on hold? Here’s everything you need to know.
What was the proposed hike?
Essentially, IRDAI wanted to increase the third-party bike and car insurance premium rates by a marginal amount. The table below details the existing and proposed third-party premium rates:
|Vehicle Engine Cubic Capacity
|| Existing Rates for the 2019-2020 Financial Year (In Rupees)
||Proposed Rates for the 2020-2021 Financial |
… Read the rest