Plan Ahead: Here’s how GST is going to impact your mutual funds, insurance premiums

Akanksha JainJul 1, 2017, 09:00 IST

The Goods and Services Tax (GST), India’s biggest tax reform which is expected to roll-out from July 1, is going to impact several items and services, one of which is insurance and mutual funds.

The GST Council set a GST rate of 18% on financial services industry, which is going to make your mutual funds a tad expensive.

“Both general insurance and life insurance premiums will hike up by a small amount due to the increase in tax rates,” said Archit Gupta, Founder & CEO ClearTax.com.

Presently, the tax on financial services is 15% and after the increase, the returns will also get affected.

Here are 4 pointers on how GST is going to impact your insurance, and mutual fund returns

See Plan Ahead: Here’s how GST is going to impact your mutual funds, insurance premiums >>

1.Effect of GST:

It will have marginal impact. The increase in service tax from 15 to 18% will make these funds slightly more expensive and the returns could be lesser than what the investors get currently.

2.Insurance policies to get expensive:

Gupta said the policies are going to get expensive, marginally. All policyholders will have to pay higher premiums on their insurance due to increase in GST rates.

3. How to make the most of policies after GST roll-out:

An average family with life, health and car insurances will find an increase of 3% in their insurance expenses.

4.Need to worry?

Assuming a family spends a total of Rs 30,000 per annum on insurance excluding service tax, their expenses will increase by 3%, i.e., Rs 900. Hence, it is not really a big increase and there is no cause for worry. If one is careful about choosing mutual funds and insurances and does the math beforehand, there should be no problems going forward.

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Plan Ahead: Here’s how GST is going to impact your mutual funds, insurance premiums

​1.Effect of GST:

2.Insurance policies to get expensive:

3. ​How to make the most of policies after GST roll-out:

4.Need to worry?

1.Effect of GST:

3. How to make the most of policies after GST roll-out: