What is the Impact of GST on Two-Wheeler Market?
The Goods and Services Tax (GST) law that came into effect on 1st July 2017 has been one of the leading tax reforms in India. It has impacted several industries across the nation. The effect of GST on the auto industry, especially the two-wheeler market has been quite productive. Let us have a detailed look at how GST has affected the Two-Wheeler Market.
Impact of GST on Two-wheelers
As a result of GST, the prices of two-wheelers have changed marginally. With GST into effect, the two-wheeler manufacturers now charge a uniform price across India. This revision of the tax rates on two-wheelers has proved to be in favor of the mass market.
Additionally, the taxes on bikes and scooters have been segmented based on the engine capacity. Two-wheelers with an engine capacity of less than 350cc are charged with a GST of 28% as compared to 30% previously. On the other hand, two-wheelers with more than 350cc of the engine capacity have to bear 31 % GST, which is 1% higher than before.
Impact of GST on the Two-Wheeler Insurance Market
The tax implications have become quite simple to understand owing to GST. Due to GST, all the taxes are now categorized under one umbrella, and there is a single tax levied on the base price. GST has also impacted the two-wheeler insurance market. After GST, the two-wheeler insurance market has witnessed a 3 percent hike. As a result of this, the policyholders have to bear an increased premium cost.
Two wheeler insurance plans are of two types- third-party insurance and comprehensive insurance. A Third-party insurance is a basic insurance policy. It is mandatory for all the vehicle owners to have at least a third party cover according to the Motor Vehicles Act, 1988. However, it is always advisable to purchase a comprehensive two-wheeler insurance policy as it provides wider coverage and includes the third-party cover as well.
Due to a 3 percent hike in the insurance market and higher premium cost of a comprehensive two wheeler insurance policy, it is possible that vehicle owners might consider shifting to a basic two-wheeler insurance policy. However, in case of an unfortunate accident, theft or loss of the vehicle, a comprehensive insurance policy is much more beneficial than a third-party cover. Hence, purchasing a comprehensive two-wheeler insurance policy is always a better option as it provides complete protection to the vehicle owners against financial liabilities arising due to unforeseen events.
Moreover, while choosing a bike insurance policy, vehicle owners can also opt for add-on benefits such as roadside assistance and zero depreciation cover. Policy buyers must always look for a bike insurance policy that offers wider coverage at low bike insurance premium. With prominent financial institutions, it is possible to avail two wheeler insurance online in a hassle-free manner.
Lastly, comparing various policies and financial institutions can help the vehicle owners avail the best deal. Owners must read the terms and conditions of their bike insurance policy carefully before purchasing it.