What is GST? These initials stand for goods and service tax. It is an indirect tax that incorporate all the indirect taxes. The indirect services subsumed here include VAT, excise duty among others. It was implemented in 2017 and has come with a couple of benefits. One of them is that it helps avoid double taxation. It has two different divisions, state GST and central GST. This taxation bill has brought changes in all fields including the insurance sector. The bill began its amendment journey in 2000. Its journey took 17 years because not until 2017 when it became effective. Even before the introduction of GST, tax was charged on premiums.
What impact has GST had on health insurance?
Increase in tax
Initially, tax on affordable health insurance stood at 15% but when GST was implemented, it raised to 18%. People followed the GST rule as the applied and renewed their insurance cover. Is that a good thing? Yes. How? Increase in tax means more resources for the growth of the sector. The health industry would stay stagnant if this tax was not increased. The 3% increase will help fund the government and other bodies to improve services in health. It might seem that the government is the only beneficiary for the increase in tax. But policy holders benefit from it in the following ways,
The taxes increase, the premiums go high. Insurance companies have increased, which has increased competition. Everyone in the market want to stay at the top of the competition by all means. To policy buyers, this is an advantage because companies will offer discounted premiums. It is a way of getting more clients. Companies like Humana health insurance have implemented this trend. Many companies might have entered the market after the rise in tax. Perhaps they so it as a way of making more through imposing high premiums. But I am glad they entered the market. The number of companies is high and the competition is higher. When buyers receive discounted premiums, they tend to stay in that insurance company. They will renew their policy knowing that the premiums are favorable. The low premiums scraps off the effect of increased tax.
Easy claim registration process
Following a long and tiresome procedure to file a claim is demotivating. Is a policy holder discovers that the process is complicated, he/she will leave that company. Who celebrates on losing clients? To keep them, insurance companies give a simple process for making claims. This becomes an advantage to policy holders. They even remain loyal to one company rather than moving from this to that. It is upon the insurance company to nurture and keep their clients. You can see the benefits that have come with the implementation of GST. The policy holder enjoys more benefits.
Better insurance services and benefits
Because of the high competition in the market, insurance services improve from one company to another. Improving the services is as a way of getting more policy buyers. These services have led to companies offering more services. For example, a company will cover pre-existing illness at a higher premium. But this is better than failing to cover at all. If you tell a prospective buyer that you cannot cover pre-existing illness, they will move to another company. The company will accept them and make a slight addition to the premiums.
GST has advantages on other fields. Here are some of the benefits GST has in other fields.
Simple application procedure
In a few years to come, more trees might grow because there will be no need for papers. GST has online services that are very simple to use. You do not need to visit their headquarters or fill many papers. Filing returns and taxes is done online and it is very effective. The GST portal makes it possible for a policy holder to comfortably file returns from the house. This saves on time and money. When the process was using a lot of paper work, it was slow and cumbersome. People spent days doing nothing as they concentrated on filing returns. With GST, you can do it from anywhere.
GST has three components, CGST, SGST and IGST. CGST and SGST are collected by the central government and state government on an intra-state sale respectively. IGST is also collected by the central government but for inter-state sale.
Things to know about taxation on health insurance
Deductions can be made on premiums paid for the parents’ health insurance. The tax benefit differs for different age groups. For instance, anyone above 60 years will get up to Rs 30,000 deduction per year. For a younger group, the tax benefits are Rs 25000 per year. This is good because most people consider the cost of the premiums. They rarely look at the services to receive.
Cash premium payments are discouraged to avail tax benefits. You can use a credit card, cheque or internet banking to make the payments. Lastly, the premiums on critical illness rider qualify for tax benefits. A rider is a plan added to your term basic insurance.
Humana health insurance is one of the many companies focusing on providing good insurance services. As a policy holder, you should consider the services to receive before considering the premiums. By now, you should know that most companies offer cheaper premiums. Take it an advantage to better your health status. GST increased the tax percentage but brought many benefits. If it were not for the GST, you could be paying high premiums for your insurance. The deductions you get on your premiums should be used to cover for the tax. You should not let chances slip off your fingers. Take advantage of every chance you get. GST created a chance for you to enjoy better premium services. It never forced the companies to offer discounts, but it played a major role.