Getting a bike for yourself is an exciting moment in your life. But when you purchase a new bike, it comes with certain important responsibilities. These responsibilities include protecting yourself and your bike from various damages that may arise in times of an emergency. This is why it is important that you undertake adequate research and choose the right bike insurance policy that suits your needs the best.
In India, whenever you purchase something you are liable to pay a certain percentage of the price as Goods and Service tax. The same comes into the picture when you purchase a bike or bike insurance online. You might be curious to know how much tax you are liable to pay when you purchase a bike insurance policy. But before that let’s get to know the basics of GST.
What is GST?
GST stands for Goods and Service Tax that every citizen of this country is liable to pay on any taxable transactions made. It has three components – Central Goods and Service Tax (CGST), State/Union Territory Goods and Service Tax (SGST/ UTGST), and Integrated Goods and Service Tax (IGST). These components come into the picture based on the location of the supply. This tax system came into effect in 2017 after subsuming 17 other taxes such as value-added tax, sales tax, entertainment tax, etc.
What is the GST Percentage on Bike Insurance?
Bike insurance attracts GST as it is a taxable supply. It is a purchase of a service by an individual from an insurance company. The premium that you pay to keep the bike insurance policy active includes the GST amount. The GST percentage on bike insurance when you get bike insurance online is 18%. Before GST came into the picture, you were liable to pay 15% tax. So how does this 3% increase affect you? There is not much of an impact as some insurance companies provide added benefits such as roadside assistance as a part of the basic policy for the increased amount.
Can we claim GST on two-wheeler insurance?
The GST number is a unique 15-digit number that is provided to an individual who has registered for the Good and Service Tax. Only people who carry out business operations can get a GST number as they have to file GST returns every year. To get the GST number you need to have a PAN number which stands for Permanent Account Number.
A business person can claim GST generally on business operations so unless and until the bike on which the insurance is taken is being used for business operations, only then you can claim GST.
To add the GST number to your bike insurance policy you can either get in touch with your insurance agent or you can get in touch with a customer care executive of the insurance company.