Abstract
The Indian economy is witnessing streamlined and focused efforts, of the kind off late for the implementation of the Goods and Service Tax (GST). With the services sector accounting for 60% of the GDP, the impact of GST on the service sector is likely to run deep. GST is undisputedly the single largest indirect tax reform since independence. It has the ability to change India's indirect taxation landscape and resulting in a positive impact on the entire economy. The present study is an attempt to understand the impact of GST on Insurance Industry along with highlighting the basic concept of GST, models of GST and its pros and cons in Indian context. The study also highlights the challenges in implementing the system. The introduction of GST will have a definitive impact on services offered by the life insurance sector. Seeking to levy GST on life insurance services would be in contrast to several countries where life insurance is a social security benefit being provided. Given the strategic importance of life insurance sector and the vast untapped market, it is believed that Government will address the concerns of the industry including ensuring merit rate of GST on insurance sector.
Highlights
Introduction of value-added tax (VAT) at the Central and the State level has been considered to be a major step in the direction of indirect tax reforms in India
If VAT is a major improvement over the pre-existing Central excise duty at the national level and the sales tax system at the State level, the Goods and Services Tax (GST) is an additional important perfection leading to widespread indirect tax reforms in the country
Goods and Service Tax (GST) is a tax system levied on manufacturing, sales and consumption of goods and services at a national level
Summary
Introduction of VAT at the Central and the State level has been considered to be a major step in the direction of indirect tax reforms in India. GST is likely to bring a sea change in the legal provisions for imposing duty/tax liability in stages of manufacture, sale (inter-state/intra-state) of goods, rendering services and shall stand replaced with the place of supply, where the final consumption and use of goods/services were made. This reform is necessary to be introduced to perceive the following benefits for the intended stakeholders: (A) To Trade. It should be noted that the assesses are, required to keep record of CGST, SGST and IGST separately
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