GST is the acronym of Goods and Services Tax which was introduced in the year 2017. It’s a tax regime that consolidates several types of indirect taxes into one. This tax scheme was implemented to reduce the cascading effects of several types of taxes and their misuse, by streamlining the entire process and bringing transparency in their utilization by the government, but this tax system has adverse effects too on Indian banks and the financial system. Some of them we have provided below. Read all the points carefully to know it better. Whether you are purchasing a business loan in Delhi/NCR or any other region, you have to pay a GST of 18% which restricts your purchasing power and limits your investment goals.

Effect of GST on Life or Health Insurance

There are various types of health and life insurance schemes run by government and private bodies. They face adverse effects in bringing stability in providing their services due to the new tax system of GST. Know here in detail:

Plans related to Term Insurance: It’s the easiest form of life insurance which offers a large range of benefits like premiums tax making plans expensive etc. The GST tax system makes the life insurance very hard for the egenral users as the term insurance contains heavy taxes and its not possible to buy for small and poor person.

ULIPs: In Unit Linked Insurance Plans, the effect of GST affects the borrower interest as the GST has risen once more after implementation from 15 to 18%. Hence, these things affect the returns of investment for the general people.

Money back and Endowment Policies: These policies was a game changer for middle class person and poor families as it was providing lump sum amount on death, with best of periodic returns for the affected families. With the rise in GST rates from 15% to 18%, it becomes impossible to buy for poor families and thus they deprived from its benefits.

Effects of GST on General Insurance Plans

GI or General Insurance includes several types of policies related to the theft of an asset, fire, marine loss, car or any vehicle loss etc. The huge shift of GST rates from 15 to 18 percent makes the process hectic with huge investments in service tax making people ignore and hesitate to buy such plans. Corporate policy holder can easily get benefit from sevral types of input tax credit on the payment of GST. Previously, middle-class persons could easily invest in financial services and insurance plans.

Impact of GST on Insurance Premiums

The effect of GST on insurance premiums affects the common person in their plan purchasing power. Some lenders and financial institutions provide several types of premium benefits on several insurance products. As a general customer, you should go through several types of financial implications for illustrating your fiances. Its veery necessary to manage your financials wth admin costs which can easily help you enhance policy pricing but you have to know everything before purchasing your plan.

Effects of GST on Banking Services

Charges of GST on Banking Increased and Thus Affects Customer Footfall

The rise in previous tax rate for the services offered in banks and financial institutions from 15% to 18% makes people hesitates in investing or depoisiting money in banks. Some people even use to invest in private investment schemes. This increase in GST affects banking charges as it affects banking services and leads to various types of fees and penalties like over-transaction penalties in the transaction of money from ATMs, debit card charges, bank processing fee. If you are applying for a business loan in Delhi/NCR, then you will also be charged by your lender or bank at the rate of 18% GST. With these things, the general public can’t manage their spending and financials with ease.

Impact of GST on Financial Organizations

The transition of the tax system to a new one “GST” imposes several types of administrative and compliance-related burdens. The tax regime of GST with a higher rate of service charge increases the risk of money management and makes financials very tough for the organiations. Now, they need to submit GST to the government failing which, they would be charged at the rate of 18% corporate tax.

Summary

GST comes with a unified tax system that affects the purchasing power of common people, investment procedures and schemes of banks/private financial organizations. The rise of tax from 15 to 18 per cent hesitates the customer and banking expert to invest in new policy as they need to invest more money with 18% GST.