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GST on Two-wheeler Insurance: Impact and Rate Changes

Published On Sep 22, 2021, Updated On Sep 24, 2021

There are many Impact and rate changes in GST on two-wheeler insurance. Read this article to take note on Impact and Rate changes in GST on two-wheeler insurance.

To unify numerous indirect tax rates, the Goods and Services Tax (GST) was established. The GST consolidated 17 different federal and state taxes into a single tax system. Bike insurance premiums are subject to GST since bike insurance is classed as a service. Continue reading to find out how GST affects two-wheeler insurance and the current GST rate for bike insurance.

GST on Two-wheeler Insurance: Impact and Rate Changes

GST on Two-wheeler Insurance: Impact and Rate Changes

Mentioned below are the significant points about how GST affects two-wheeler insurance and the current GST rate for bike insurance-

  • GST on Two-wheeler Insurance in India

Before implementing the GST, the tax structure for two-wheeler insurance comprised excise duty, value-added tax (VAT), central sales tax (CST), and so on, with a 15% tax rate.

The GST rates for goods and services are divided into five categories under the new tax structure (0 percent, 5 percent, 12 percent, 18 percent, and 28 percent ). The GST on bike insurance for your two-wheeler premiums is 18 percent since it falls under the services category.

  • Effect of GST on Bike Insurance Market

The GST council, which sets the tax rates for goods and services in India, has fixed the GST rate for two-wheeler insurance at 18%. There is a 3% rise in comparison to the previous tax rate of 15%. The premium for bike insurance rises somewhat when the tax rate rises.

Digital insurers, on the other hand, adopt the direct-to-customer or no-commission model and provide insurance solely through an online platform. There is a decrease in operational expenses with a 100 percent digital infrastructure and no-commission approach. The savings are subsequently passed on to you in the form of low-cost bike insurance policies, reducing the rise in insurance premiums caused by the tax rate increase for your two-wheeler.

  • GST and Insurance

In India, there are many different types of insurance plans. They are categorized as follows-

  • Life Insurance: Under this type of insurance scheme, there is a further classification as Endowment Schemes, Term Insurance Policies, Unit Linked Policies, Money-Back Policies, Whole Life Policies, and Annuity/Pension Policies.
  • General Insurance: Car insurance, two-wheeler insurance, health insurance, home insurance, marine insurance, commercial insurance, travel insurance, and so on are all types of general insurance policies.


  • GST Impact on Two-wheeler Industry

The GST on bike insurance has boosted premiums somewhat, but the GST on two-wheeler sales is considerably different. Before implementing the GST, the tax rate on the sale of two-wheelers was 30%. However, with the GST, the tax rates for two-wheelers with engines less than 350cc and those with engines greater than 350cc are different.

  • GST Rate on Electric Bikes

The GST rate for bike insurance on electric two-wheelers or electric cars was previously set at 12%. However, the GST council reduced it to 5% on August 1, 2019.

  • GST on Used/Old Bikes

The GST rate for used motorcycles or two-wheelers was previously 28 percent, the same as for new cars, but it has now been reduced to 12 percent. The cess that was imposed on the former GST rate has also been eliminated in the bike insurance.

Take Away

Despite the minor rise in the tax rate as GST on bike insurance, ensuring your two-wheeler with the Comprehensive Insurance Policy is critical, which provides greater coverage. Aside from third-party liability coverage, the Comprehensive Policy also includes Own Damage insurance, which covers damages or losses to the covered two-wheeler.

Also Read:

How to Find the VIN, Chassis Number and Engine Number of Two Wheeler  

Purchasing A Used Bike From A Different State? Keep These Things in Mind!

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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