FAQs on Goods and Service Tax (‘GST’)

  1. What is GST? How will my insurance policies get impacted due to GST?

GST is a destination based tax on consumption of goods and services. GST will replace most of the key indirect taxes in India, including service tax. For the life insurance services the impact of GST would also be not only on the rate of tax applicable but also on operational aspects such as policy issuance, premium receipt / invoicing, cancellations, etc.

  1. What is the date when GST is expected to be implemented in India?

The new Goods and Services Tax is proposed to be implemented in India from 1 July 2017 in all States of India except Jammu & Kashmir State.

  1. What type of GST is proposed to be implemented?

The GST to be levied by the Centre on intra-State supply of services would be called the Central GST (CGST) and that to be levied by the States/ Union territory would be called the State GST (SGST)/ UTGST. Similarly, Integrated GST (IGST) will be levied and administered by Centre on every inter-state supply of goods and services.

  1. How will Reliance Nippon Life Insurance Company determine the type of GST to be levied on my insurance policy

The computation of the SGST + CGST or IGST on the premium received will be based on your address on records of Reliance Nippon Life Insurance Company.

  1. What are the rate of taxes applicable under GST on various kind of insurance products?

The below table gives a comparison on the rates of tax applicable on various products under GST and Service tax

Product Category / GST Rate / Existing Service Tax Rate / Increase in Tax Rate
Term Product / 18% / 15% / 3%
Health Product / 18% / 15% / 3%
ULIP (non-investment portion i.e. charges) / 18% / 15% / 3%
Single Annuity Product / 1.8% / 1.5% / 0.3%
Endowment Products
- First Year / 4.5% / 3.75% / 0.75%
Endowment Products
- Second year onwards / 2.25% / 1.875% / 0.375%
Interest on reinstatement of policy / 18% / - / 18%
  1. My policy is due on 15 July 2017, will I have to pay GST on premium paid on 15 July 2017?

GST will be applicable for all the premiums paid on or after 1 July 2017. For premium paid on 15 July, 2017, GST will be applicable on the premium paid

  1. When I surrender/withdraw/ cancel my policy, is my value pay-out subject to GST?

Your value pay-out is not subject to GST. However, any fee on surrender/withdrawal/ cancellation charged will be subject to GST at a standard rate.

  1. In case of a claim settlement, will the claim I receive from insurance company be subject to GST?

The claim pay-out made by insurance company will not be subject to GST.

  1. Will I receive a tax invoice from Reliance Nippon Life Insurance Company for the premium that I paid?

Yes, if the plan is subject to GST, we will send a tax invoice issued in accordance with GST regulations to your address available on record.