GST will be effective in India from July 1 onward. While it will lead to reducing cost of a lot of goods and services under its ambit, some of them will see a price hike too. Your credit card bills and insurance premiums will see a hike too. For both credit card bills and insurance premiums, the GST slab applicable is 18 per cent. However, should this news affect you in any way? Let’s analyse the credit card bill and insurance premium hike after GST situation.
Insurance, Credit Card Bill Hike After GST
Case Before GST
Prior to GST, credit card bills and insurance premiums attract 15 per cent service tax. However, it is not just credit card bills and insurance premiums that will become costlier. A number of banking services will become costlier once GST is implemented. With insurance subscriptions already on a rise, the move to increase taxes on such products will prove counter-productive.
As far as credit card bills go, depending on a person’s spending habits, the bills pinched him/her accordingly. With the news of tax increase on credit card bills, new subscriptions may not get affected as masses generally do not prefer to go for a credit card.
What After GST?
Post GST, a drop in insurance subscriptions may happen. To ensure the impact is minimal, insurance providers are offering deals on their products to new users. For credit card providers, the situation post GST may not even change at all. If the recent CIBIL survey is anything to go by, masses in India have a good spending habit and awareness levels when it comes to credit cards. So, while bills will see a rise, a 3 per cent increase in taxes should not affect credit card users much.
In the end, all this hullabaloo around GST increasing insurance premiums and credit card bills is something you should not worry about. Firstly, if you need an insurance premium, unless you opt for a premium plan that operates on monthly basis, increased taxes should not trouble you for another year. In case of credit card bills too, unless your spending goes out of hand, there is no need to worry about increased taxes or even think about junking your credit card.