SUMMER TRAINING PROJECT REPORT

ON

“IMPACT OF GST ON INSURANCE SECTOR WITH

SPECIAL REFERENCE TO BHARTI AXA LIFE”

1
 ACKNOWLEDGEMENT

A training report is never the sole product of the person whose name appears on the cover.
There is always help, guidance and suggestion of many in preparation of such a report. So
it becomes my first duty to express my gratitude towards all of them.

I would like to give my special thanks to Mr. Mohammad Shahid Alam (Agency
Development Manager), Bharti Axa,Aligarh for providing me the official help and mental
support for the completion of this report.

A token of deep appreciation to my friends who were always by my side at time of need,
other than above there were many friends whom I have failed to mention the names have
also done the needful for me.

Above all, I am beholden to my parents for their loving and caring attitude and generous
support at every step of my life.

Sandeep

Roll No.
AMU, Aligarh

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 TABLE OF CONTENT
Certificate
Declaration
Acknowledgement
Preface
CHAPTER-1 1-11
 Organization Profile
CHAPTER-2 12-40
 An Overview of Goods and Service Tax (GST)
CHAPTER-3 41-62
 Development of Insurance Industry in India
CHAPTER-4 63-64
 Objectives
 Research Methodology
CHAPTER-5 67-78
 Impact of GST on Insurance Sector: An Analysis
CHAPTER-6 79-91
 Data Analysis and Interpretation
CHAPTER-8 92-93
 Suggestions
 Conclusion
 Limitations
 Bibliography
Annexure 103-105

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 Preface

All industries, including the Insurance Industry, will be affected with the implementation
of GST. Not only insurance industry, but also policy holders will be affected with GST
implementation.

As per the rates declared by GST council, insurance sector will have 18 per cent as GST
rate. Various insurance company officials said the rate hike would be immediately passed
on to customers, hence the customers would be the one to pay additional tax.

This would mean, direct impact on the premium being paid by the policy holders.

During discussion, GST council had difference in opinion for GST rates whether it should
be 12% or 18%. But then finally it was decided to have a unified GST rate of 18% across
financial sectors.

The premium paid by policy holder is based on the type of policy they buy. Insurance
Policy are broadly categorised as Term plan, Endowment Plan, ULIP, Health Insurance
Plan, Motor insurance.

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 Chapter-1

Organization Profile

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 Bharti AXA Life Insurance

Bharti AXA Life is a life Insurance player that was started in 2006. It brings
together strong financial expertise of the Paris-headquartered AXA Group, and
Bharti Enterprises - one of India's leading business groups with interests in telecom,
agricultural business, financial services, and retail. The joint venture has a 74%
stake from Bharti and 26% stake from AXA Asia Pacific Holdings Ltd.(APH).The
company launched national operations in December 2006. Today, Bharti AXA Life
has a national footprint of distributors trained to provide quality financial advice
and insurance solutions to the large Indian customer base.
Bharti AXA Life offers a range of innovative products and services that cater to
specific insurance and wealth management needs of customers.
AXA GROUP
AXA Group is a worldwide leader in Financial Protection. AXA’s operations are
diverse geographically, with major operations in Europe, North America and the
Asia/Pacific area. In 2010, total revenues amounted to Euro 91 billion and total
revenues underlying earnings to Euro 3.9 billion
Bharti Enterprises
Bharti Enterprises is one of India’s leading business groups with interests in
telecom, agricultural business, financial services, and retail. Bharti has been a
pioneering force in the telecom sector with many firsts and innovations to its credit.
Bharti Airtel Limited, a group company, is one of India’s leading private sector
providers of telecommunications services with an aggregate of over 110 million
customers, spanning Mobile services, Telemedia services and Enterprise services.
Bharti Airtel has been ranked amongst the best performing companies in the world
in the Business Week IT 100 list 2007. Bharti Teletech is the country’s largest
manufacturer and exporter of telephone terminals. Bharti has a joint venture –
Bharti Del Monte India (P) Ltd – with Del Monte Foods India Pvt. Ltd., to offer
fresh and processed fruits and vegetables in the domestic as well as international
markets including Europe, USA and Middle East. Bharti has recently forayed into

6
 retail business under Bharti Retail Pvt. Ltd. It also has a joint venture - Bharti Wal-
Mart Private Ltd. - with Wal-Mart for wholesale cash-and-carry and back-end
supply chain management operations in India.

Visions & Values

Strategy
 To achieve a market position among the top 5 in India through a multi-distribution,
multi-product platform
 To adapt AXA's best practice blueprints as a sound platform for efficient and
profitable growth
 To leverage Bharti's local knowledge, infrastructure and customer base
 To deliver high levels of shareholder return
 To build long term value with our business partners by enhancing the proposition to
their customers
 To be the employer of choice to attract and retain the best talent in India
 To be recognized as being close and qualified by our customers.
Strategic differentiator
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  Strong partner Bharti - provides access to customer base of more than 130
million
 Multi channel execution capability
 Current Asia product range which is a strong match to products sold to the
mass and mass affluent
 Global scale providing cost effective and speedy re-use of systems, products
and business capability
 Strong AXA and Bharti brands which can be leveraged to attract and retain a
high quality management team

OUR PRODUCT
Insurance Plans - Life Insurance, Term Insurance, Health Insurance

Protection Plans

Bharti AXA Life eProtect

 Bharti AXA Life Elite Secure

 Bharti AXA Life Family Income Secure
 Bharti AXA Life Protect Plus
 Bharti AXA Life Premium Waiver Rider

Wealth Creation with Protection

Bharti AXA Life Child Plans

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 Bharti AXA Life Bright Stars EDGE
 Bharti AXA Life Power Kid Insurance Plan
 Bharti AXA Life Guaranteed Plans
 Bharti AXA Life Monthly Income Plan
 Bharti AXA Life Aajeevan Sampatti
 Bharti AXA Life Young India Plan
 Bharti AXA Life Secure Savings Plan
 Other Market Link Plans
 Bharti AXA Life Future Invest

Health Plans

 Bharti AXA Life Triple Health Insurance Plan

 Bharti AXA Life Easy Health

Individual Life Insurance Plans

At Bharti AXA Life, we want to take care of your responsibilities in the same way
as you do for your loved ones, with a range of life insurance services. Through our

9
 life insurance products, you can trust us to take care of your family at all times.
You can select the most suitable plan from our host of plans and make buying life
insurance simple and convenient. Each of the plans, right from traditional life
insurance to unit linked life insurance, fall in specified segments and fulfill your
specific objectives. You can learn more about the segment and specific plans within
the segment by clicking on the type of plan.
To know why you need an insurance plan and which one is the best for you, please
click above on 'Why do you need Life Insurance'

 Protection
 Wealth Creation
with Protection
 Health
Protection

Protection Plan with High Life Cover

Protect your loved ones against financial contingencies at nominal costs
You love your family and feel responsible towards them in every way. But life can
be uncertain and unforeseen contingencies can meet you anytime. At such
times, life insurance comes to your rescue. As someone who wants only the best for
their family, we understand your need to safeguard your family against any crisis.
Our protection plans offer you high life cover at nominal costs so that you can

10
 fulfill your responsibility with ease and your family never has to face financial
constraints.

Bharti AXA Life eProtect

 The simplest way to secure your family online

Bharti AXA Life Elite Secure

 Pure Life Insurance cover at very competitive premiums

 Option to cover your life till 75 years with a unique to age 75 years term

Bharti AXA Life Family Income Secure

 Guaranteed Annual Income for your family in case of any eventuality 100% return
of premium at maturity

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 Bharti AXA Life Protect Plus

 Financial Protection for your family

 Guaranteed Cash Back on maturity

Bharti AXA Life Premium Waiver Rider

 100% of all future premiums under the base policy are waived and paid by the
Company on death of the life insured under the rider.

Wealth Creation with Protection

Ensure your family's security as you maximize your savings
You can make your money work harder with our Wealth Creation with Protection
plans. These plans come with the double advantage of:
 Complete peace of mind as your family is financially protected and
 Good investment option that ensures long-term financial goals are met

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 Bharti AXA Life -
Child Plans
 Bharti AXA Life -
Guaranteed Plans
 Bharti AXA Life - Other
market linked plans

Bharti Axa Life -

Child Plans

Life Insurance Plans

With Bharti AXA Life insurance products, provide financial security and protection
to your loved ones. Simple affordable plans to safeguard your family from life's
uncertainties.

Bharti AXA Life Shield

Simple and affordable life insurance solution that financially secures the family of
the group member by providing a life insurance cover.

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Bharti AXA Life Sanjeevani

A single premium group term life insurance product which provides financial
security and protection to your loved ones.

Management Profile

Glenn Williams is the Chief Executive Officer and Managing Director for Bharti AXA
Life Insurance Co. Ltd. Prior to this, he was the Regional General Manager, Corporate
Development and Strategy for AXA Asia Life.

In this position, Mr. Williams worked with AXA Asia Life's senior management to expand
operations across the region in markets including Hong Kong, China, India, Indonesia,
Malaysia, Singapore, Thailand and the Philippines.

Mr. Williams has been with AXA since 2002 and has held key positions in Hong Kong
and the Philippines. Mr. Williams has over 15 years of experience in the insurance
industry, particularly in the areas of product & pricing actuary, operations and finance.

In 2006, Mr. Williams led AXA Asia Life's successful integration of MLC and
Winterthur. Prior to joining AXA, Mr. Williams was Marketing Actuary with Swiss
Reinsurance Company in Hong Kong. Mr. Williams graduated with a BSC (Honor) from
Southborough University, UK and has been a fellow of the Institute of Actuaries (UK)
since 1998.

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Mark Meehan is currently the Chief Marketing and Operations Officer for Bharti AXA
Life Insurance Company Ltd.

Mark’s previous role in AXA was that of CEO of Tynan Mackenzie P/L, a professional
investment services company. His role in Bharti AXA Life as CMOO includes Marketing,
Product Development, Customer Service, Underwriting, Claims, Channel & Distribution
Operations, Information Technology and Systems, Six Sigma, Business Continuity and
Client Persistency Management.

Mark’s career path spans a range of markets and geographies. He is a graduate from Royal
Military College, Duntroon and has served as a commissioned Officer in the Australian
Army. Mark has also enjoyed a successful international military career covering high
technology and systems engineering.

In 1994, he transferred his skills to the private telecommunication market, basing himself
in the UK. On his return to Australia in 1997, Mark was a consultant to public and private
sector clients in systems engineering and outsourcing, after which he moved to Equant in
Singapore as their Asia Pacific Outsourcing Director. In 2000, Mark was appointed
Equant’s General Manager for Australasia. Mark joined AXA Australia in 2002 and
handled major roles in strategy execution, business turnaround, operations and general
management. Mark held directorships of several AXA subsidiaries. In September 2006,
Mark was appointed CEO and Director of Tynan Mackenzie P/L after leading the
acquisition team to a successful transaction conclusion.

Expand for more

V Srinivasan is currently the Chief Financial Officer of Bharti AXA Life Insurance
Company. He started his career as a Chartered Accountant in 1989 and over the past two
decades has emerged as a stalwart in the financial sector. With over 8 years of rich

15
experience in the Life Insurance industry, today, he stands as a storehouse of financial
knowledge and expertise. His portfolio also boasts of extensive experience in diverse
industrial segments like manufacturing and oil & gas.

From April 1996 to February 2002, he has handled Corporate Finance and Tax at Cairn
Energy India Pvt Ltd. He has held responsibilities in Accounting and Project Reporting at
Kentz, Kuwait, Reliance and SRF Ltd. He has also functioned as the Senior Vice President
- Corporate Affairs at ICICI Prudential Life Insurance Company and CFO of AMP Samar
Life Insurance Company from February 2002 to December 2005.

Expand for more

Sushanto Mukherjee is the Chief Distribution Officer for Bharti AXA Life Insurance
Company Ltd. Prior to this; he was Director & Head Partnership Distribution & Group
Business at Max New York Life Insurance Co. Ltd.

He started his career with ITC-Welcome group hotels division in 1989. He has
subsequently worked in various reputed organizations such as Xerox; Reliance Infocomm
& Tata AIG in senior positions managing sales at Zonal & National Levels.Sushanto has
over 21 years of experience across Insurance, Telecom, Hospitality and Office
Automation.

He has a strong background in developing & managing partnership channels in Life

Insurance, managing large teams in Retail Distribution and effectively leading direct sales
teams in the Corporate Segment. He is an MBA from Cardiff Business School United
Kingdom.

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Priya Ranjan is Director - Human Resources at Bharti AXA Life Insurance Company. He
brings to the business over 15 years of HR experience in diverse fields spanning financial
services, information technology and manufacturing. He specializes in building large scale
businesses right from their project days.

Before joining Bharti AXA Life, Ranjan was with JPMorgan Chase Bank, Singapore as
Vice President and Regional HR Manager - Technology & Operations (APAC) from May
2005, after serving the office of Vice President and Head - HR for the Global Service
Centre of the Bank in India for about 3 years. Between June 1997 and May 2002, Ranjan
was with GE Capital as Vice President and Head - HR for the Credit Card business, where
he was a part of the Project Team responsible for creating the business in India.

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 Chapter-2

An Overview of Goods and Service Tax

(GST)

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 An Overview of products and repair Tax

Goods Associate in Nursingd Services Tax (GST) is an taxation that was introduced in
Bharat on one Gregorian calendar month 2017 and was applicable throughout India which
replaced multiple cascading taxes levied by the central and state governments. it
absolutely was introduced because the Constitution (One Hundred and 1st Amendment)
Act 2017, following the passage of Constitution 122nd change Bill. The GST is ruled by a
GST Council and its Chairman is that the minister of finance of Bharat. Under GST,
product and services are taxed at the subsequent rates, 0, 5%, 12% ,18% and twenty
eighth. there's a special rate of zero.25% on rough precious and semi-precious stones and
three on gold. additionally access of V-day or different rates on prime of twenty eighth
GST applies on few things like aerated drinks, luxury cars and tobacco product. GST was
at first projected to switch a slew of indirect taxes with a unified tax and was so set to
dramatically reshape the country's a pair of trillion greenback economy. the speed of GST
in Bharat is between double to fourfold that levied in different countries like Singapore.

The Goods and Services Tax (GST) may be a huge construct that simplifies the enormous
tax structure by supporting and enhancing the economic process of a rustic. GST may be a
comprehensive tax levy on producing, sale and consumption of products and services at a
national level. the products and Services account or GST Bill, conjointly said because the
Constitution (One Hundred and ordinal Amendment) Bill, 2014, initiates a price additional
Tax to be enforced on a national level in Bharat. GST are Associate in Nursing taxation in
the slightest degree the stages of production to evoke uniformity within the system.

On transportation GST into follow, there would be consolidation of Central and State
taxes into one tax payment. it'd conjointly enhance the position of Bharat in each,
domestic moreover as international market. At the patron level, GST would cut back the
tax burden, that is presently calculable at 25-30%.

Under this method, the patron pays the ultimate tax however Associate in Nursing
economical input decrease system ensures that there's no cascading of taxes- tax on tax
paid on inputs that enter manufacture of products.

In order to avoid the payment of multiple taxes like excise duty and repair tax at Central
level and VAT at the State level, GST would unify these taxes and make a homogenous
market throughout the country. Integration of assorted taxes into a GST system can evoke

19
a good cross-utilization of credits. this system taxes production, whereas the GST can aim
to tax consumption.

Experts have noncommissioned the advantages of GST as under:

• it'd introduce two-tiered One-Country-One-Tax regime.

• it'd subsume all indirect taxes at the middle and also the state level.

• it'd not solely widen the tax regime by covering product and services however conjointly
create it clear.

• it'd free the producing sector from cascading result of taxes, therefore by improve the
cost-competitiveness of products and services.

• it'd bring down the costs of products and services and therefore by, increase
consumption.

• it'd produce business-friendly atmosphere, therefore by increase tax-GDP magnitude

relation.

• it'd enhance the benefit of doing business in Bharat.

GST or product and Services Tax because the name implies, it's Associate in Nursing
taxation applied each on product and services at a homogenous rate. this suggests product
and services are subject to a homogenous rate and each will be treated at par.A single type
of tax referred to as GST or product and services tax are applied throughout the
country,replacing variety of different indirect taxes like VAT,Service tax,CST,CAD etc.

GST or product and Services Tax – a replacement law,a new tax can bring with it new
challenges to face that require to be tackled with utmost care.

So,GST bill covers the product and Services Tax and shall be the
foremost necessary taxation reform providing an even and simplified
suggests that of Indirect taxation in Bharat. Once introduced GST will
replace type of totally different indirect taxes like VAT,CST,Service tax,
CAD,S AD, Excise, Entry tax ,purchase tax etc.

So,a bundle of indirect taxes will get replaced by a replacement tax in

Bharat said as GST or product and Services Tax. Hence ,leading to a so

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much simplified tax regime as compared to the earlier subtle tax
structure comprising of assorted taxes.

As and once a replacement reform or bill comes and a new law is

obligatory,it sure as shooting leaves its impact particularly on the
commoner.It is ultimately the commoner United Nations agency is
directly or indirectly plagued by the implementation of any new tax.

And now too there’s no exception, the commoner needs to prepare for
the implications.The commoner includes not solely the ultimate client of
products however all the little traders and repair suppliers United
Nations agency shall be directly affected when the introduction of GST.

Here,we have tried to hide up the foremost points associated with Impact
of GST on the commoner or the ultimate client and the general impact of
GST.

Simply declared,we have highlighted the most advantages and downsides

of GST and the way GST can have an effect on the commoner.

**Important note : On third November,2016 a four tier GST rate

structure has been passed, the ultimate block rates being prescribed are
five-hitter,12%,18% and twenty eighth.

Final GST block rates are :

Zero rated things : Food grains employed by people. ( A sigh of

relief…hmmm…)

5% Rate : things of mass consumption as well as essential commodities

can have low tax incidence.

12% and eighteen the speed : 2 customary rates are finalised as twelve-
tone system and eighteen.

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28% Rate : White merchandise like Air conditioners, laundry machines,
refrigerators, soaps and shampoos etc. that were taxed at 30-31% shall
be currently taxed at twenty eighth.

Country Rate of GST

Australia 100%

France nineteen.6%

Canada five-hitter

Germany nineteen

Japan five-hitter

Singapore seven-membered

Sweden twenty fifth

New Seeland 15 August 1945

In India, government projected the GST rate at twenty seventh that is

well on top of the world average of sixteen.4% for similar taxes.

But, Our minister of finance, Mr. Arun Jaitley told lawmakers that the
projected rate is simply too high and required to be way more diluted.
however some states are inquiring for a fair higher rates for GST.

Exemptions and exceptions have additionally been worked into the GST
bill. This tax will not apply to alcohol and rock oil product. These
are going to be taxed singly at initial. And producing states can be
allowed to levy a further tax of 1 Chronicles on provide of products.

World over in virtually one hundred fifty countries there's GST or VAT,
which suggests tax on merchandise and services. underneath the GST

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theme, no distinction is formed between merchandise and services for
levying of tax. In different words, merchandise and services attract the
same rate of tax. GST is a multi-tier tax wherever final burden of
tax fall on the client of goods/services. It is termed as price side tax as a
result of at each stage, tax is being paid on the worth addition.
underneath the GST theme, an individual United Nations agency was
prone to pay tax on his output, whether or not for provision of service or
sale of products, is entitled to induce input reduction (ITC) on the tax
paid on its inputs.

HISTORY

The reform method of India's tax regime was started in 1986 by

Vishwanath Pratap Singh, minister of finance in Rajiv Gandhi’s
government, with the introduction of the changed price side Tax
(MODVAT). later, Manmohan Singh, then minister of finance
underneath of P V Narasimha Rao, initiated early discussions on a price
side Tax at the state level. one common "Goods and Services Tax (GST)"
was projected and given a go-ahead in 1999 throughout a gathering
between then Prime Minister Atal Sanskrit Vajpayee and his economic
informative panel, including 3 former run governors antibody Patel,
Bimal Jalanand C Rangarajan. Vajpayee discovered a committee headed
by the then minister of finance of West Bengal, Asim Dasgupta to style a
GST model.

The Ravi Dasgupta committee was additionally tasked with setting up

place the backend technology and provision (later came to be referred to
as the GST Network, or GSTN, in 2017) for rolling out a standardized
taxation regime within the country. In 2002, the Vajpayee government
fashioned a task force underneath Vijay Kelkar to advocate tax reforms.

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In 2005, the Kelkar committee suggested rolling out GST as advised by
the twelfth Finance Commission.

After the autumn of the BJP-led NDA government in 2004, and also the
election of a Congress-led UPA government, the new minister of finance
P Chidambaram in February 2006 continuing work on identical and
projected a GST rollout by one April 2010. but in 2010, with the
Trinamool Congress routing CPI (M) out of power in West Bengal, Asim
Dasgupta resigned because the head of the GST committee. Dasgupta
admitted in associate degree interview that eightieth of the task had been
done.

In 2014, the NDA government was re-elected into power, now

underneath the leadership of Narendra Modi. With the important
dissolution of the fifteenth Lok Sabha, the GST Bill – approved by the
committee for presentation – nonchurchgoing. Seven months when the
formation of the Modi government, the new minister of finance Arun
Jaitley introduced the GST Bill within the Lok Sabha, wherever the BJP
had a majority. In February 2015, Jaitley set another point in time of one
April 2016 to implement GST. In might 2016, the Lok Sabha passed the
Constitution change Bill, paving approach for GST. However, the
Opposition, LED by the Congress demanded that the GST Bill be once
more sent back to the committee of the Rajya Sabha thanks to
disagreements on many statements within the Bill with reference to
taxation. Finally in August 2016, the change Bill was passed. Over
succeeding fifteen to twenty days, eighteen states sanctioned the GST Bill
and also the President Pranab Mukherjee gave his assent thereto.

A 21-members committee was fashioned to appear into the projected

GST laws. State and Union Territory GST laws were gone all the states

24
and Union Territories of Bharat except Jammu & geographic
region, paving the approach for sleek rollout of the tax from one
Gregorian calendar month 2017. There was to be no GST on the sale
and get of securities. That continues to be ruled by Securities dealing Tax
(STT).

Launch

The Goods and Services Tax was launched in the dark on one Gregorian
calendar month 2017 by the President of Bharat Pranab Mukherjee and
Prime Minister of India, Narendra Modi. The launch was marked by a
historic hour (1 Gregorian calendar month – a pair of July) session of
each the homes of parliament convened at the Central Hall of the
Parliament. although the session was attended by high-profile guests
from the business and also the industry as well as switch Tata, it
absolutely was boycotted by the opposition thanks to the expected issues
that it was absolute to cause for the center and class Indians. it's one in
all the few hour sessions that are command by the parliament - the
others being the declaration of India's independence on fifteen August
1947, and also the silver and golden jubilees of that occasion.

Members of the Congress boycotted the GST launch altogether. They

were joined by members of the Trinamool Congress, Communist Parties
of Bharat and also the DMK. These parties rumored that they found
nearly no distinction between the GST and also the existing taxation
system, claiming that the govt was attempting to simply rebrand this
taxation system. They additionally argued that the GST would increase
existing rates on common daily merchandise whereas reducing rates on
luxury things, and have an effect on several Indians adversely,
particularly the center, lower middle and poorer categories.

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OBJECTIVES OF GST

One of the main objective of merchandise & Service Tax(GST)

would be to eliminate the cascading effects of taxes on production and
cost of products and services. The exclusion of cascading effects i.e. tax
on tax can considerably improve the aggressiveness of original
merchandise and services in market that ends up in useful impact to the
GDP growth of the country. it's felt that GST would serve a superior
reason to realize the target of streamlining tax regime in Bharat which
might take away cascading effects in provide chain until the extent of
ultimate shoppers.

It has been hailed as India's 'biggest tax reform.' when months of

political wheeling and dealing, the govt has won a political agreement on
the a lot of expected merchandise and services tax (GST) bill, that passed
within the Rajya Sabha nowadays. The GST can produce a standard
marketplace for over one.25 billion individuals.

It's a blanket tax which will subsume many indirect state and federal
taxes like price side tax (VAT) and excise duty, and totally different state
taxes, central surcharges, amusement tax, luxury tax and a slew of
connected levies by native bodies.The GST is probably going to be at
eighteen per cent, and is wide expected to be enforced next year in April.

Expect several merchandise and purchases to become cheaper with the

exception of fuel, liquor and tobacco. whereas many industries are
expected to be beneficiaries, the industry is also an enormous winner
because it can considerably bring down the twenty seven per cent
amusement tax. Here's however reaching to moving pictures|the
films|the flicks} can become cheaper: the central and state taxes return
to regarding ₹66 on a ₹300 movie price tag. The tax may return all the

26
way down to regarding ₹46. Stocks of PVR cinema have shot up in
recent weeks. Another beneficiary is that the construction and building
materials trade, which suggests the housing sector may be an enormous
winner with things like paints and cement turning into cheaper.

The GST is predicted to feature 2 per cent to the country's GDP, besides
creating the movement of products easier across states. as a result of to
this point taxes have varied across states, usually industrial trucks have
had to travel through multiple checkpoints to get the mandatory permits
and pay many taxes to the states they depart this world their routes, that
causes delays and encourages graft. a standardized tax can build that
movement of business product drum sander.

The GST has been within the creating for quite a decade. Congress
originally mooted GST in 2006 and a constitution change bill was
introduced in Lok Sabha in March 2011 however it nonchurchgoing with
the dissolution of the fifteenth Lok Sabha.

The GST Bill was gone the Lok Sabha in might 2015, however got stuck
within the Rajya Sabha wherever BJP doesn't have a majority. The bill
desires a nod from the simple fraction in each homes of Parliament and
can have to be compelled to later sanctioned by fifty per cent of state
legislatures.

The government had to deal with many issues and comply with key
amendments demanded from the opposing political parties on the key
projected provisions of the GST bill. One such change has been the
scrapping of a further one per cent tax, that was projected earlier as
some way to compensate states on any revenue losses. this may have
resulted in a very cascading tax and defeated the intent of a "destination-
based" tax that's GST. The Modi government has additionally united to

27
grant additional powers to states for providing them full compensation
for a amount of 5 years, for revenue losses.

The opposition demand for the putting in of a dispute resolution

mechanism as a part of the GST council has additionally been prescribed
by the govt.

However, with the passage of the GST Bill, the govt can have to be
compelled to put up a mad scramble to place along all the mechanisms
and state approvals in situ to implement the GST by its rollout date of
April one, 2017.

Additionally, corporations and tax collectors can have to be compelled to

be ready on the mandatory changes. Some corporations might even have
to be compelled to overhaul their business processes to form approach
for the new tax amendment.25 Key Takeaways of Final GST Rules
passed by GST Council

In its ordinal meeting in Srinagar on eighteenth and nineteenth might,2017 the powerful
GST council cleared seven rules bearing on totally different aspects of GST. These rules
relate to Registration, Input reduction, Payment, Refund, Invoice, Valuation and
Composition and have paved the manner for the rollout of GST from Dominion Day,
2017. The key highlights of those final GST Rules are as follows:

Registration

1. PAN is necessary for taking registration below GST. PAN are valid by CBDT. when
eminent validation, registration are granted.

2. If someone features a SEZ unit, then he's needed to create separate registration
application for that unit. Similarly, a separate application of registration is needed for
turning into Input Service Distributor.

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3. A non- resident seeking registration below Non-Resident nonexempt Person should
appoint a certified individual WHO can sign the appliance of registration. That person
should be resident of Asian nation having a legitimate PAN.

4. someone registered below GST is needed to show his certificate of registration at a

distinguished location at his principal place of business and GST range on the name board
at entry of his principal place of business.

5. Physical verification of place of business won't be conducted to grant registration below

GST. however officer will do physical verification when granting of registration, if he's
happy that it's necessary to try and do an equivalent. He should transfer verification report
on GST Portal inside fifteen operating days when verification.

Invoice

1. Tax invoice just in case of offer of nonexempt services should be issued inside thirty
days of date of supply of services. However, deadline for banking concern, monetary
institution} or financial establishments is forty five days.

2. The invoice shall be in triplicate for offer of products and in duplicate for offer of
Services.

3. The serial range of invoices issued are furnished with electronically on GST Portal.

4. On receiving advance, Receipt Voucher are issued. If rate isn't calculable, tax is to be
paid at eighteen. If nature of offer isn't calculable, it'll be treated as Inter-State offer.

5. If reverse charge is applicable, the recipient can issue Payment Voucher. Payment

6. Electronic Liability Register shall be maintained for every person vulnerable to pay tax
on the GST Portal.

7. Electronic Credit Ledger and Electronic money Ledger shall even be maintained on the
GST Portal for the person eligible for input reduction and for person vulnerable to pay tax
severally.

29
8. Tax are paid solely through net banking, RTGS, NEFT or Debit and Credit Cards.
However, over the counter payment is allowed through approved banks for the quantity up
to Rs.10,000 per challan per tax amount.

Refund

1. A separate formula is prescribed for optimum Refund just in case of inverted duty
structure, i.e., GST rate is higher on Inputs than on Output offer.

2. Refund application shall be filed electronically on GST Portal.

3. The grant of probationary refund shall be created if person clamming refund has not
been prosecuted throughout any amount of five years preceding the tax period that refund
is claimed. However, the subsequent two condition mentioned in Draft Refund rules are
deleted:

a. The assessee ought to have a GST compliance rating of not but five.

b. The assessee mustn't have any unfinished continuing or attractiveness on any issue.

4. If Commissioner needs to withhold refund, order should be issued at the side of reasons
of withholding refund.

Valuation

1. the worth of supply created by principal to its agent or made to any connected person
shall be ninetieth of value charged for the availability of like kind and quality to unrelated
person.

2. the worth of a token, coupon or a voucher shall be capable the money worth of products
redeemable against such token or voucher or coupon.

3. The expense incurred by a provider as a pure agent won't type worth of offer and shall
be excluded. The provider are treated as pure agent on compliant with following 3
conditions:

a) He makes payment to 3rd party on authorization by such recipient.

b) The payment created by pure agent on behalf of recipient has been shown severally on
invoice.

30
c) The provides procured from third party by pure agent on behalf of recipient are
additionally to services he supplies on his own account. Earlier, in draft rules, eight
conditions were prescribed. Now, solely these 3 conditions have to be compelled to be
consummated.

Input reduction

1. The person eligible to require credit in respect of input of products command available
when registartion is needed to file a declaration on GST Portal that he's eligible for input
reduction inside thirty days.

2. ITC wouldn't be on the market to registered person if tax has been paid by provider
when issuance demand order on account of fraud, wilful statement or suppression of facts.

3. The deadline to assert input reduction isn't applicable to re-claim credit reversed earlier
thanks to non-payment of thought to provider.

Composition

24. Following persons won't be eligible for composition scheme:a. Casual nonexempt
person or non-resident taxable personb. Person having merchandise available that were
purchased in course of inter-State trade or from unregistered person

4. Rates of Taxes for Composition Levy:

a) makers, apart from makers of such merchandise as is also notified by the govt. – at I
Chronicles

b) Suppliers creating provides brought up in clause (b) of paragraph half-dozen of

Schedule II – at two

c) the other provider – at zero.5%

Transition Rules are hosted on the govt. web site, its salient options are as under:

1. Persons entitled to require transition credit can have to be compelled to submit a

declaration inside ninety days (upto thirtieth Sept) specifying the credit he needs to take on
stocks lying with him on 30th Gregorian calendar month.

2. Declaration can have to be compelled to be submitted in from GST Tran-1

31
3. Commissioner will extend this timeline by another ninety days

4. just in case of capital merchandise whose half credit was availed in current amount and
part credit is to be availed below GST, he can have to be compelled to submit the
declaration specifying:

a) quantity of credit already availed within the current law

b) quantity of credit however to be availed below the prevailing law and that he intends to
avail under GST amount

5. Persons having excise invoices for stocks lying as on thirtieth Gregorian calendar month
are entitled to require full credit of excise mentioned within the invoices

6. Deemed Credit:

Persons WHO don't have excise invoice, are eligible to require credit within the following
manner:

a) For merchandise nonexempt @ eighteen or higher than - Credit shall be allowed at the
speed of hr of CGST due thereon goods – thus if the rate is eighteen then credit are on the
market @ five.4% (60% of Sept. 11 CGST)

b) For merchandise apart from higher than - Credit shall be allowed at the speed of four-
hundredth of CGST due thereon goods – thus if the rate is 12-tone system then credit are
on the market @ two.4% (40% of 6 June 1944 CGST)

7. Credit within the higher than Deemed Credit theme are on the market just one occasion
the same merchandise are sold and GST is paid. It’s sort of a money back theme.

8. to require the credit during this theme following conditions can have to be compelled to
be fulfilled:

a) such merchandise weren't flatly exempt from excise

b) the document for acquisition of such merchandise is out there

c) the stock of products on that the credit is availed is thus keep that it may be simply
known by the registered person.

32
9. Deemed credit theme can press on for six months from GST date, thus stocks lying as
on thirtieth Gregorian calendar month have to be compelled to be sold most upto thirty
first Gregorian calendar month, 2017. No credit are on the market if these merchandise are
sold when Gregorian calendar month 2017.

10. Separate come below for GST TRAN-2 can have to be compelled to be filed.

11. every body to whom the supply of section 142 (11) (c) applies, shall submit a
declaration inside ninety days of GST date in type GST TRAN-1 furnishing the proportion
of supply on that VAT or service tax has been paid before the GST day however the
availability is created when the GST day, and therefore the ITC permissible on that.

12. every body to whom the provisions of section 141 (Jobworker) apply shall, inside
ninety days of the GST day, submit a declaration electronically in type GST TRAN-1,
specifying in this, the stock command by him on the appointed day.

13. every body having sent merchandise on approval below the prevailing law and to
whom section 142 (12) applies shall, inside ninety days of the appointed day, submit
details of such merchandise sent on approval in type GST TRAN-1.

GST Implementation in Asian nation

India’s biggest tax reform is currently a reality. A comprehensive twin merchandise and
Services Tax (GST) has replaced the advanced multiple revenue enhancement structure
from one Gregorian calendar month 2017.

The thought of GST was envisioned for the primary time in 1999. On eight August 2016,
the Constitutional change Bill for roll out of GST was gone the Parliament, followed by
confirmation of the bill by quite fifteen states and enactment of the bill in early Sep.

The GST Council consisting of representatives from the Central also as authorities, met on
eighteen occasions in last 10 months and cleared –

• GST laws,

• GST Rules,

• rate structure as well as Compensation Cess,

• Classification of products and services into totally different rate slabs,

33
• Exemptions,

• Thresholds,

• Tax administration

On twelve April 2017, the Central Government enacted four GST Bills:

• Central GST (CGST)

• Integrated GST (IGST)

• Union Territory GST (UTGST)

• Bill to Compensate States

In a short span of your time, all the states (excluding Jammu and Kashmir) approved their
State GST (SGST) laws. Union territories with general assembly, i.e., city &
Puducherry, have adopted SGST Act and therefore the balance five Union territories while
not legislatures have adopted UTGST Act.

The government has conjointly notified GST rules, tax rates on merchandise and services,
exemption list and classes of services on that reverse charge is applicable.

The second section of entering method for migrating existing taxpayers to the planned tax
regime through GST common portal has already commenced from one Gregorian calendar
month 2017. GST Network, associate IT backbone of GST, has conjointly disbursed the
take a look at run of its Portal. GSTN has discharged offline utility for GSTR-1.

In view of the difficulties moon-faced by taxpayers in filing returns, a simplified come in

type GSTR-3B (containing outline of outward and inward supplies) are needed to be filed
up to the month of Gregorian calendar month. deadline for filing careful returns for the
months of Gregorian calendar month to Gregorian calendar month is extended. Due dates
for filing come for the month of Gregorian calendar month 2017 are as follows:

Return Existing Due date Revised Due date

GSTR -1 (for registered 10 September 2017 3 October 2017

persons with aggregate
turnover > INR 100
crores)

34
 GSTR -1 (for others) 10 September 2017 10 October 2017

GSTR -2 25 September 2017 31 October 2017

GSTR -3 30 September 2017 10 November 2017
GSTR -6 08 September 2017 13 October 2017

Rate classification for goods

Exempt 5% 12% 18% 28% 28% +

Cess
Food grains Coal Fruit Juices Kitchenware Air Small cars
Cereals Sugar Vegetable Juices Hair Oil conditioner (1% / 3%
Milk Tea & Beverages Soap Refrigerators cess)
Jaggery Coffee containing milk Toothpaste
Common Salt Drugs & Jams Glass fibre Luxury cars
Medicine (15% cess)
Edible Oil

35
 Rate classification for services

Exempt 5% 12%-18% 28%

 Education  Goods transport  Works contract  Cinema tickets

 Healthcare  Rail tickets (other Business Class air travel Betting
 Residential than sleeper class)  Telecom services  Gambling
accommodation  Economy class air Financial services  Hotel/ Lodges with
 Hotel/ Lodges tickets  Restaurant services tariff above INR
with tariff below Cab aggregators  Hotel/ Lodges with tariff 7500
INR 1000  Selling space for between INR 1000 and
advertisements in 7500
print media

Only rates of select goods and services have been mentioned here

 GST rate on pearls, precious or semi-precious stones, diamonds (other than rough
diamonds), precious metals (like gold and silver), imitation jewellery, coins – 3%

 GST rate on rough diamonds – 0.25%

TYPES OF GST

36
Points for consideration

 Ensure that all the eligible credits available under Excise / VAT are filed in the last
return
 The books of accounts reconcile with the returns filed
 All invoices / supporting documents are properly maintained
 Reconciliation of stocks lying at all locations along with the job worker
 Ensure that all invoices are received and payments are made before the cut-off date
to avail credit
 Assess the impact of GST on business and make necessary adjustments
 For industry, this is the time to kick start various activities such as impact analysis
and transition issues
 Getting ready with the compliance requirements will reduce the burden on the
industry
 Industry also needs to gear up their IT systems

Let’s take an example:

37
The Central GST and the State GST would be levied simultaneously on every transaction
of supply of goods and services except on exempted goods and services, goods which are
outside the purview of GST and the transactions which are below the prescribed threshold
limits. Further, both would be levied on the same price or value unlike State VAT which is
levied on the value of the goods inclusive of Central Excise.
A diagrammatic representation of the working of the Dual GST model within a
State is shown in Figure 1 below.
Figure 1: GST within State

In case of inter-State transactions, the Centre would levy and collect the
Integrated product and Services Tax (IGST) on all inter-State provides of
products and services beneath Article 269A (1) of the Constitution. The
IGST would roughly be adequate CGST and SGST. The IGST mechanism
has been designed to confirm seamless flow of input reduction from one
State to a different. The inter-State vender would pay IGST on the sale of
his product to the Central Government once adjusting credit of IGST,
CGST and SGST on his purchases (in that order). The commercialism
State can transfer to the Centre the credit of SGST utilized in payment of
IGST. The commercialism dealer can claim credit of IGST whereas
discharging his output liabilities (both CGST and SGST) in his own State.
The Centre can transfer to the commercialism State the credit of IGST

38
utilized in payment of SGST.Since GST could be a destination-based tax,
all SGST on the ultimate product can usually accrue to the intense State.

For the implementation of GST within the country, the Central and State
Governments have conjointly registered product and Services Tax Network
(GSTN) as a not-for-profit, non-Government Company to produce shared
IT infrastructure and services to Central and State Governments, tax
payers and alternative stakeholders. The key objectives of GSTN are to
produce a typical and uniform interface to the taxpayers, and shared
infrastructure and services to Central and State/UT governments.

GSTN is functioning on developing a progressive comprehensive IT

infrastructure together with the common GST portal providing frontend
services of registration, returns and payments to all or any taxpayers, still
because the backend IT modules sure enough States that embody process of
returns, registrations, audits, assessments, appeals, etc. All States,
accounting authorities, run batted in and banks, also are making ready
their IT infrastructure for the administration of GST.

There would no manual filing of returns. All taxes also can be paid on-line.
All mis-matched returns would be auto-generated, and there would be no
want for manual interventions. Most returns would be self-assessed.

A delineated illustration of the operating of the IGST model for inter-State

transactions is shown in Figure two below.Figure 2

39
 Chapter-3

Development of Insurance Industry in India

40
 Insurance Industry in India

The insurance industry of India consists of 57 insurance companies of which 24 are in life
insurance business and 33 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these, there is sole national re-
insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in
Indian Insurance market include agents (individual and corporate), brokers, surveyors and
third party administrators servicing health insurance claims.
Market Size
Government's policy of insuring the uninsured has gradually pushed insurance
penetration in the country and proliferation of insurance schemes.
Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18,
with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38
billion) from non-life insurance. Overall insurance penetration (premiums as % of GDP) in
India reached 3.69 per cent in 2017 from 2.71 per cent in 2001.
In FY19 (up to October 2018), premium from new life insurance business increased 3.66
per cent year-on-year to Rs 1.09 trillion (US$ 15.46 billion). In FY19 (up to October
2018), gross direct premiums of non-life insurers reached Rs 962.05 billion (US$ 13.71
billion), showing a year-on-year growth rate of 12.40 per cent.
The number of lives covered under Health Insurance policies during 2015-16 was 36 crore
which is approximately 30 per cent of India's total population. The number has seen an
increase every subsequent year as 28.80 crore people had the policy in the previous fiscal.
During April 2015 to March 2016 period, the life insurance industry recorded a new
premium income of Rs 1.38 trillion (US$ 20.54 billion), indicating a growth rate of 22.5
per cent. The general insurance industry recorded a 12 per cent growth in Gross Direct
Premium underwritten in April 2016 at Rs 105.25 billion (US$ 1.55 billion). The life
insurance industry reported 9 per cent increase in overall annual premium equivalent in
April-November 2016. In the period, overall annual premium equivalent (APE)- a measure
to normalise policy premium into the equivalent of regular annual premium- including
individual and group business for private players was up 16 per cent to Rs 1,25,563 crore
(US$ 18.76 billion) and Life Insurance Corporation up 4 per cent to Rs 1,50,456 crore
(US$ 22.48).

41
India’s life insurance sector is the biggest in the world with about 360 million policies
which are expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per
cent over the next five years. The insurance industry plans to hike penetration levels to
five per cent by 2020.
The country’s insurance market is expected to quadruple in size over the next 10 years
from its current size of US$ 60 billion. During this period, the life insurance market is
slated to cross US$ 160 billion.
The general insurance business in India is currently at Rs 78,000 crore (US$ 11.44 billion)
premium per annum industry and is growing at a healthy rate of 17 per cent.
The Indian insurance market is a huge business opportunity waiting to be harnessed. India
currently accounts for less than 1.5 per cent of the world’s total insurance premiums and
about 2 per cent of the world’s life insurance premiums despite being the second most
populous nation. The country is the fifteenth largest insurance market in the world in terms
of premium volume, and has the potential to grow exponentially in the coming years.
Investments
The following are some of the major investments and developments in the Indian
insurance sector.

 As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo Munich

Health Insurance at a valuation of around Rs 2,600 crore (US$ 370.05 million).
 In October 2018, Indian e-commerce major Flipkart entered the insurance space in
partnership with Bajaj Allianz to offer mobile insurance.
 In August 2018, a consortium of WestBridge Capital, billionaire investor Mr
Rakesh Jhunjunwala announced that it would acquire India’s largest health insurer
Star Health and Allied Insurance in a deal estimated at around US$ 1 billion.
 In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance policy for
individuals.
 Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7
billion) through public issues in 2017.
 In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals
worth US$ 903 million.
 India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture
with Ebix Inc to build a robust insurance distribution network in the country
through a new distribution exchange platform.

42
 New York Life Insurance Company, the largest life insurance company in the US,
has invested INR 121 crore (US$ 18.15 million) in Max Ventures and Industries
Ltd for a 22.52 per cent stake, which will be used by Max for investing in new
focus areas of education and real estate.
 New York Life Investments, the global asset management division of New York
Life, along with other investors like Jacob Ballas, will own a significant minority
ownership in Centrum Capital by being one of the leading global investors in
buying the available 30 per cent stake worth US$ 50 million of Centrum Capital.
 Bharti AxaCo Ltd and HDFC Life Insurance Co Ltd have signed a merger
agreement, which is expected to create India's largest private sector life insurance
company once the transaction is completed.
 Aviva Plc, the UK-based Insurance company, has acquired an additional 23 per
cent stake in Aviva Life Insurance Company India from the joint venture (JV)
partner Dabur Invest Corporation for Rs 940 crore (US$ 141.3 million), thereby
increasing their stake to 49 per cent in the company.
 Insurance firm AIA Group Ltd has decided to increase its stake in Tata AIA Life
Insurance Co Ltd, a joint venture owned by Tata Sons Ltd and AIA Group from 26
per cent to 49 per cent.
 Canada-based Sun Life Financial Inc plans to increase its stake from 26 per cent to
49 per cent in Birla Sun Life Insurance Co Ltd, a joint venture with Aditya Birla
Nuvo Ltd, through buying of shares worth Rs 1,664 crore (US$ 244.14 million).
 Nippon Life Insurance, Japan’s second largest life insurance company, has signed
definitive agreements to invest Rs 2,265 crore (US$ 332.32 million) in order to
increase its stake in Reliance Life Insurance from 26 per cent to 49 per cent.
 Bennett Coleman and Co. Ltd (BCCL), the media conglomerate with multiple
publications in several languages across India, is set to buy Religare Enterprises
Ltd’s entire 44 per cent stake in life insurance joint venture Aegon Religare Life
Insurance Co. Ltd. The foreign partner Aegon is set to increase its stake in the joint
venture from 26 per cent to 49 per cent, following government’s reform measure
allowing the increase in stake holding by foreign companies in the insurance
sector.
 GIC Re and 11 other non-life insurers have jointly formed the India Nuclear
Insurance Pool with a capacity of Rs 1,500 crore (US$ 220.08 million) and will

43
 provide the risk transfer mechanism to the operators and suppliers under the CLND
Act.
 State Bank of India has announced that BNP Paribas Cardiff is keen to increase its
stake in SBI Life Insurance from 26 per cent to 36 per cent. Once the foreign joint
venture partner increases its stake to 36 per cent, SBI’s stake in SBI Life will get
diluted to 64 per cent.

Government Initiatives
The Union Budget of 2018-19 has made the following provisions for the Insurance Sector:
In September 2018, National Health Protection Scheme was launched under Ayushman
Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million
vulnerable families. The scheme is expected to increase penetration of health insurance in
India from 34 per cent to 50 per cent.
Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana
(PMFBY) in 2017-18.
The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India, which
are to looking to divest equity through the IPO route.
IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds
that are issued by banks to augment their tier 1 capital, in order to expand the pool of
eligible investors for the banks.
The Government of India has taken a number of initiatives to boost the insurance industry.
Some of them are as follows:

 The Union Cabinet has approved the public listing of five Government-owned
general insurance companies and reducing the Government’s stake to 75 per cent
from 100 per cent, which is expected to bring higher levels of transparency and
accountability, and enable the companies to raise resources from the capital market
to meet their fund requirements.
 The Insurance Regulatory and Development Authority of India (IRDAI) plans to
issue redesigned initial public offering (IPO) guidelines for insurance companies in
India, which are to looking to divest equity through the IPO route.

44
  IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1)
bonds, that are issued by banks to augment their tier 1 capital, in order to expand
the pool of eligible investors for the banks.
 IRDAI has formed two committees to explore and suggest ways to promote e-
commerce in the sector in order to increase insurance penetration and bring
financial inclusion.
 IRDAI has formulated a draft regulation, IRDAI (Obligations of Insures to Rural
and Social Sectors) Regulations, 2015, in pursuance of the amendments brought
about under section 32 B of the Insurance Laws (Amendment) Act, 2015. These
regulations impose obligations on insurers towards providing insurance cover to
the rural and economically weaker sections of the population.
 The Government of Assam has launched the Atal-Amrit Abhiyan health insurance
scheme, which would offer comprehensive coverage for six disease groups to
below-poverty line (BPL) and above-poverty line (APL) families, with annual
income below Rs 500,000 (US$ 7,500).
 The Uttar Pradesh government has launched a first of its kind banking and
insurance services helpline for farmers where individuals can lodge their
complaints on a toll free number.
 The select committee of the Rajya Sabha gave its approval to increase stake of
foreign investors to 49 per cent equity investment in insurance companies.
 Government of India has launched an insurance pool to the tune of Rs 1,500 crore
(US$ 220.08 million) which is mandatory under the Civil Liability for Nuclear
Damage Act (CLND) in a bid to offset financial burden of foreign nuclear
suppliers.
 Foreign Investment Promotion Board (FIPB) has cleared 15 Foreign Direct
Investment (FDI) proposals including large investments in the insurance sector by
Nippon Life Insurance, AIA International, Sun Life and Aviva Life leading to a
cumulative investment of Rs 7,262 crore (US$ 1.09 billion).
 IRDAI has given initial approval to open branches in India to Switzerland-based
Swiss Re, French-based Scor SE, and two Germany-based reinsurers namely,
Hannover Re and Munich Re.

The insurance industry of India consists of 57 insurance companies of which 24 are in life
insurance business and 33 are non-life insurers. Among the life insurers, Life Insurance

45
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these, there is sole national re-
insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in
Indian Insurance market include agents (individual and corporate), brokers, surveyors and
third party administrators servicing health insurance claims.
Market Size
Government's policy of insuring the uninsured has gradually pushed insurance
penetration in the country and proliferation of insurance schemes.
Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18,
with Rs 4.58 trillion (US$ 71.1 billion) from life insurance and Rs 1.51 trillion (US$ 23.38
billion) from non-life insurance. Overall insurance penetration (premiums as % of GDP) in
India reached 3.69 per cent in 2017 from 2.71 per cent in 2001.
In FY19 (up to October 2018), premium from new life insurance business increased 3.66
per cent year-on-year to Rs 1.09 trillion (US$ 15.46 billion). In FY19 (up to October
2018), gross direct premiums of non-life insurers reached Rs 962.05 billion (US$ 13.71
billion), showing a year-on-year growth rate of 12.40 per cent.
The number of lives covered under Health Insurance policies during 2015-16 was 36 crore
which is approximately 30 per cent of India's total population. The number has seen an
increase every subsequent year as 28.80 crore people had the policy in the previous fiscal.
During April 2015 to March 2016 period, the life insurance industry recorded a new
premium income of Rs 1.38 trillion (US$ 20.54 billion), indicating a growth rate of 22.5
per cent. The general insurance industry recorded a 12 per cent growth in Gross Direct
Premium underwritten in April 2016 at Rs 105.25 billion (US$ 1.55 billion). The life
insurance industry reported 9 per cent increase in overall annual premium equivalent in
April-November 2016. In the period, overall annual premium equivalent (APE)- a measure
to normalise policy premium into the equivalent of regular annual premium- including
individual and group business for private players was up 16 per cent to Rs 1,25,563 crore
(US$ 18.76 billion) and Life Insurance Corporation up 4 per cent to Rs 1,50,456 crore
(US$ 22.48).
India’s life insurance sector is the biggest in the world with about 360 million policies
which are expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per
cent over the next five years. The insurance industry plans to hike penetration levels to
five per cent by 2020.

46
The country’s insurance market is expected to quadruple in size over the next 10 years
from its current size of US$ 60 billion. During this period, the life insurance market is
slated to cross US$ 160 billion.
The general insurance business in India is currently at Rs 78,000 crore (US$ 11.44 billion)
premium per annum industry and is growing at a healthy rate of 17 per cent.
The Indian insurance market is a huge business opportunity waiting to be harnessed. India
currently accounts for less than 1.5 per cent of the world’s total insurance premiums and
about 2 per cent of the world’s life insurance premiums despite being the second most
populous nation. The country is the fifteenth largest insurance market in the world in terms
of premium volume, and has the potential to grow exponentially in the coming years.
Investments
The following are some of the major investments and developments in the Indian
insurance sector.

 As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo Munich

Health Insurance at a valuation of around Rs 2,600 crore (US$ 370.05 million).
 In October 2018, Indian e-commerce major Flipkart entered the insurance space in
partnership with Bajaj Allianz to offer mobile insurance.
 In August 2018, a consortium of WestBridge Capital, billionaire investor Mr
Rakesh Jhunjunwala announced that it would acquire India’s largest health insurer
Star Health and Allied Insurance in a deal estimated at around US$ 1 billion.
 In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance policy for
individuals.
 Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7
billion) through public issues in 2017.
 In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals
worth US$ 903 million.
 India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture
with Ebix Inc to build a robust insurance distribution network in the country
through a new distribution exchange platform.
 New York Life Insurance Company, the largest life insurance company in the US,
has invested INR 121 crore (US$ 18.15 million) in Max Ventures and Industries
Ltd for a 22.52 per cent stake, which will be used by Max for investing in new
focus areas of education and real estate.

47
 New York Life Investments, the global asset management division of New York
Life, along with other investors like Jacob Ballas, will own a significant minority
ownership in Centrum Capital by being one of the leading global investors in
buying the available 30 per cent stake worth US$ 50 million of Centrum Capital.
 Bharti AxaCo Ltd and HDFC Life Insurance Co Ltd have signed a merger
agreement, which is expected to create India's largest private sector life insurance
company once the transaction is completed.
 Aviva Plc, the UK-based Insurance company, has acquired an additional 23 per
cent stake in Aviva Life Insurance Company India from the joint venture (JV)
partner Dabur Invest Corporation for Rs 940 crore (US$ 141.3 million), thereby
increasing their stake to 49 per cent in the company.
 Insurance firm AIA Group Ltd has decided to increase its stake in Tata AIA Life
Insurance Co Ltd, a joint venture owned by Tata Sons Ltd and AIA Group from 26
per cent to 49 per cent.
 Canada-based Sun Life Financial Inc plans to increase its stake from 26 per cent to
49 per cent in Birla Sun Life Insurance Co Ltd, a joint venture with Aditya Birla
Nuvo Ltd, through buying of shares worth Rs 1,664 crore (US$ 244.14 million).
 Nippon Life Insurance, Japan’s second largest life insurance company, has signed
definitive agreements to invest Rs 2,265 crore (US$ 332.32 million) in order to
increase its stake in Reliance Life Insurance from 26 per cent to 49 per cent.
 Bennett Coleman and Co. Ltd (BCCL), the media conglomerate with multiple
publications in several languages across India, is set to buy Religare Enterprises
Ltd’s entire 44 per cent stake in life insurance joint venture Aegon Religare Life
Insurance Co. Ltd. The foreign partner Aegon is set to increase its stake in the joint
venture from 26 per cent to 49 per cent, following government’s reform measure
allowing the increase in stake holding by foreign companies in the insurance
sector.
 GIC Re and 11 other non-life insurers have jointly formed the India Nuclear
Insurance Pool with a capacity of Rs 1,500 crore (US$ 220.08 million) and will
provide the risk transfer mechanism to the operators and suppliers under the CLND
Act.
 State Bank of India has announced that BNP Paribas Cardiff is keen to increase its
stake in SBI Life Insurance from 26 per cent to 36 per cent. Once the foreign joint

48
 venture partner increases its stake to 36 per cent, SBI’s stake in SBI Life will get
diluted to 64 per cent.

Government Initiatives
The Union Budget of 2018-19 has made the following provisions for the Insurance Sector:
In September 2018, National Health Protection Scheme was launched under Ayushman
Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million
vulnerable families. The scheme is expected to increase penetration of health insurance in
India from 34 per cent to 50 per cent.
Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana
(PMFBY) in 2017-18.
The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India, which
are to looking to divest equity through the IPO route.
IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds
that are issued by banks to augment their tier 1 capital, in order to expand the pool of
eligible investors for the banks.
The Government of India has taken a number of initiatives to boost the insurance industry.
Some of them are as follows:

 The Union Cabinet has approved the public listing of five Government-owned
general insurance companies and reducing the Government’s stake to 75 per cent
from 100 per cent, which is expected to bring higher levels of transparency and
accountability, and enable the companies to raise resources from the capital market
to meet their fund requirements.
 The Insurance Regulatory and Development Authority of India (IRDAI) plans to
issue redesigned initial public offering (IPO) guidelines for insurance companies in
India, which are to looking to divest equity through the IPO route.
 IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1)
bonds, that are issued by banks to augment their tier 1 capital, in order to expand
the pool of eligible investors for the banks.
 IRDAI has formed two committees to explore and suggest ways to promote e-
commerce in the sector in order to increase insurance penetration and bring
financial inclusion.

49
  IRDAI has formulated a draft regulation, IRDAI (Obligations of Insures to Rural
and Social Sectors) Regulations, 2015, in pursuance of the amendments brought
about under section 32 B of the Insurance Laws (Amendment) Act, 2015. These
regulations impose obligations on insurers towards providing insurance cover to
the rural and economically weaker sections of the population.
 The Government of Assam has launched the Atal-Amrit Abhiyan health insurance
scheme, which would offer comprehensive coverage for six disease groups to
below-poverty line (BPL) and above-poverty line (APL) families, with annual
income below Rs 500,000 (US$ 7,500).
 The Uttar Pradesh government has launched a first of its kind banking and
insurance services helpline for farmers where individuals can lodge their
complaints on a toll free number.
 The select committee of the Rajya Sabha gave its approval to increase stake of
foreign investors to 49 per cent equity investment in insurance companies.
 Government of India has launched an insurance pool to the tune of Rs 1,500 crore
(US$ 220.08 million) which is mandatory under the Civil Liability for Nuclear
Damage Act (CLND) in a bid to offset financial burden of foreign nuclear
suppliers.
 Foreign Investment Promotion Board (FIPB) has cleared 15 Foreign Direct
Investment (FDI) proposals including large investments in the insurance sector by
Nippon Life Insurance, AIA International, Sun Life and Aviva Life leading to a
cumulative investment of Rs 7,262 crore (US$ 1.09 billion).
 IRDAI has given initial approval to open branches in India to Switzerland-based
Swiss Re, French-based Scor SE, and two Germany-based reinsurers namely,
Hannover Re and Munich Re.

The future looks promising for the life insurance industry with several changes in
regulatory framework which will lead to further change in the way the industry conducts
its business and engages with its customers.
The overall insurance industry is expected to reach US$ 280 billion by 2020. Life
insurance industry in the country is expected grow by 12-15 per cent annually for the next
three to five years.

50
Demographic factors such as growing middle class, young insurable population and
growing awareness of the need for protection and retirement planning will support the
growth of Indian life insurance.

General insurance

Category Number of
organizations

publicly owned general insurers 4

private insurers completely owned by an Indian 1

business organization

specialized general insurers 2

private insurers' JV with international insurers 14

Specialized health insurers 3

Life insurance

Category Number of
organizations

publicly owned life insurers 1

private insurers' JV with international insurers 21

private insurers completely owned by an Indian 2

business organization

India insurance product composition

Following is an approximate representation of the product composition of India's
insurance industry:
General insurance

Percentage
Product

51
Engineering 4

Motor OD 27.63

Motor TP 14.94

Health 22.58

Aviation 1.08

Liability 2.40

Personal accident 2.63

Fire 10.91

Marine 5.97

Others 7.37

Life insurance

Product Percentage

Non linked life individual 21.70

Non linked gen annuity group 4.33

Non linked gen annuity individual 0.85

Non linked pension group 4.22

Non linked pension individual 0.25

Non linked health 0.09

Linked insurance 55.01

Riders 0.01

Linked life group 13.54

India insurance industry major problems

Following are a number of the key issues plaguing the insurance business in India:

52
• specialise in figurer valuation
• regulative misunderstanding
• Investment rules
• economic condition regulation
• Claims settlement procedures
• knowledge clarity
• channel problems
India insurance business contribution to value
Experts are of the opinion that round the world the insurance business contributes around
four.5% to national GDPs. they need questioned the quality of opinions that in Bharat the
contribution will be higher oral communication that there are alternative vital sectors like
education, defense, and health that can't be undermined during this context.
They have dominated out potentialities that the world will contribute 100% to India's value. The
Chairman of IRDA, Hari Narayan has dominated out any such risk asking if India's value growth
are going to be that abundant within the next few years ahead.
The IRDA states that in Bharat land and gold are additional most well-liked as sorts of investment.
Narayan feels that if the insurance sector is to try to to well in terms of contribution to value then
additional folks ought to be convinced regarding its capability to produce sensible ROI (return on
investment).
Why are additional folks taking insurance policies?
One of the key reasons for associate degree increasing variety of individuals availing insurance
policies in Bharat is that the growing level of awareness. folks today worth their lives, their
health, and their families even over before given the powerful economic circumstances and then
wish to create certain that everything is okay even though they're not there.
Yet another reason for the growing quality of insurance policies is that the advantage of tax
exemption that's provided to family headed and individual plans. Majority of the non-public
insurers additionally offer moneymaking returns and are currently being availed by a locality of
the Indian society with larger disposable earnings.
There is a side of psychological comfort connected to the insurance policies furthermore -

whenever associate degree insurance is availed the customer will be more or less assured of a

secure future for that exact a part of his or her life.

Insurance Companies in India

53
 Aviva Life Insurance
 Bajaj Allianz Life Insurance
 Birla Sun Life Insurance
 HDFC Standard Life Insurance
 ING Vysya Life Insurance
 Life Insurance Corporation of India
 Bharti AxaCompany
 MetLife India Insurance
 Reliance Life Insurance
 Sahara India Life Insurance
 SBI Life Insurance
 Tata AIG Insurance Company Ltd
 Om Kotak Mahindra Insurance Company
 Agriculture Insurance Company of India Ltd
 Amsure Insurance
 ANZ Insurance
 Cholamandalam General Insurance
 Employee's State Insurance Corporation
 ICICI Lombard General Insurance
 IFFCO-Tokio General Insurance
 National Insurance Company Ltd
 Oriental Insurance Company Ltd
 Peerless Smart Financial Solutions
 Royal Sundaram Alliance Insurance India
 Tata AIG Insurance Company Ltd
 Export Credit Guarantee Corporation of India Ltd

54
 Chapter-4

Objectives of the study

Research methodology

55
 OBJECTIVES OF THE STUDY
 To study the Insurance industry in Aligarh district.

 To understand the Goods and Service Tax in India

 To analyze the impact of Goods and Service Tax (GST) on insurance Sectors with

special reference to Bharti Axa Life Insurance.

56
 RESEARCH METHODOLOGY

In the present study, an attempt has been made to measure and evaluate the Impact of GST
on Insurance Sector with special reference to Bharti Axa. The study is based on primary
and secondary data. Primary data collected through questionnaire and secondary data
collected from annual reports of the respective IRDA, Insurance Companies, magazines,
journals, documents and other published information.
 Universe: - Finite.

 Research Design - Descriptive.

 Sampling method - Simple random sampling.

Data collection:

1.Primary Data

 Questionnaire

2.Secondary Data

 Magazines.

 Companies Reports and

 Companies websites.

Size of the sample - 50

Sampling unit - The sample unit is Customer of Bharti Axa Life

Research Area - Aligarh

57
 Chapter-5

Impact of GST on Insurance Sector: Analysis and

Findings

58
 Impact of GST on Insurance Sector: An Analysis & Finding

The Indian economy has ne'er before witnessed such efficient and
centered efforts, of the sort that's being seen off late for the
implementation of the products and repair Tax (GST). The approach of
the govt appears precise and therefore the pace at that hurdles are
cleared is ought to have admiration. within the month of Sep 2016 alone,
the govt has ensured that the Constitution (One Hundred and ordinal
Amendment) Bill, 2014 received the assent of the President, set the muse
stone for the GST Council, notified the provisions of the constitution
change and even control 2 back to back conferences of the GST Council.
This change was approved by most states in an exceedingly short time
that made-up the method for its fast implementation. The speed with
that the required approvals were place in situ shows the seriousness of
the govt with relation to this path breaking initiative. This quick paced
revenue enhancement reforms method appears to outgo our fast paced
lives so as to make sure its implementation by Gregorian calendar month
one, 2017.
GST is unarguably the one largest revenue enhancement reform since
independence. it's the power to vary India’s indirect taxation landscape
thereby having a positive impact on the economy as a full. Economists
have deliberated at length the impact GST can wear India’s gross
domestic product. With the services sector accounting for hr of the gross
domestic product, the impact of GST on the service sector can run deep.
The introduction of GST can have a definitive impact on services offered
by the life assurance sector.
The potential of the life assurance sector in Bharat is limitless, because it
offers monetary protection for the lifestage goals of the soul. However,

59
the penetration of the life assurance is awfully low and it needs a lift to
reinforce its coverage and reach.
Presently, the speed of service tax on life assurance services ranges from
one.5% to fifteen relying upon the character of the policy, the burden of
that is directly body part by the tip client. beneath the GST regime, the
GST Council would have the facility to see the GST rate. it's vital to
notice that the Revenue Neutral Rate (RNR) report on the GST Law free
by the Chief Economic consultant in Dec 2015 has counseled the quality
GST rate to be set at eighteen. assumptive the quality rate of eighteen is
adopted by the GST Council, for the life assurance sector the speed of
GST would be on top of the current (maximum) service rate of 15
August 1945. With the burden of indirect taxes being body part by the
ultimate client, it doesn't seem that the load of revenue enhancement can
ease beneath the GST and would solely deter soul from seeking life cowl
leading to lower levels of penetration.
Seeking to levy GST on life assurance services would be in distinction to
many countries together with the EU, Africa, Australia, Malaysia and
Singapore wherever life assurance could be a Social Security profit
provided by the govt. Taking cues from these countries, it's vital that the
GST rate on life assurance services be zero rated instead taxed at a lower
rate so as to make sure that the advantage of insurance is availed by
every and each person. the govt had exempted Pradhan Mantri Jeevan
Jyoti insurance policies from relevance of serviceable tax and there have
been encouraging results from the society in massive. This shows that the
govt acknowledges the very fact that life assurance policies go an
extended thanks to offer Social Security. A monetary secure society can
focus a lot of on efforts towards progress instead of worrying concerning
a way to economically sustain themselves. Hence, by creating life

60
assurance, costlier, we'll be putting off a well established suggests that to
create a financially secure society.
The lower rate ought to additionally apply to key input services such
insurance auxiliary services and re-insurance services, else burdensome
the same services at the quality rate of eighteen would end in associate
inverted duty structure.
Further, there's a necessity to scale back the executive burden of
compliance. life assurance policies are generally sourced by agents,
WHO sometimes reside within the same State as that of the client.
However, the policy is mostly underwritten and issued at the top
workplace of the life assurance Company. consequently, it's going to be
processed that GST must be paid by the top workplace. This approach
would make sure that the States don't lose out on the revenue. to boot,
the conception of bury branch provide shouldn't be extended on the life
assurance sector considering that such a large amount of activities are
inter connected. it's additionally next to not possible to trace the amount
of those activities. it's any urged that the centralized assessment
continues beneath IGST from the purpose of read of easy doing business.
GST on input services like commission of agents and insurance services,
amongst others, ought to be rendered to the account of the top workplace
itself wherever the contract agreements with service suppliers reside. this
might guarantee a sleek credit chain and simplified compliance. it's
urged that a prudent and efficacious mechanism be prescribed for the
transfer of credit accumulated at branches or promoting offices to avoid
unutilized credits and therefore increase extra load of refund method.
Given the strategic importance of the life assurance sector and therefore
the immense untapped market, one is hopeful that the govt can address
the issues of the business together with making certain benefit rate of
GST on life assurance services.
61
The introduction of GST in taxation regime in Bharat can bring a major
modification within the hands of soul. The service sector are going to be
a lot of affected than the other sector. As a result, if you're paying
significant insurance premiums, be ready for the new taxation structure
because it can price you a lot of as rate might rise to 18%(as per the
rumors). So, if your premium is presently Rs. 1,000, you will have to be
compelled to pay Rs. 20-30 more.
The insurance plans are divided into 2 components i.e. protection and
investment. The service tax is levied on the idea of the insurance set up.
Have a glance at this table for your reference:
With the arrival of GST, the Insurance business will have a negative
impact on the value of premiums and it'll rise thanks to the rise in rate
from 15 August 1945 to eighteen just in case of insurance plans, ULIPS,
insurance or car insurance. The regular payment might rise from
one.5% to 1.8% and Endowments premium for the freshman set up
from three.75% to 4.5% and renewal set up from one.875% to 2.25%.
this transformation can bring hike up to three hundred basis points a lot
of in taxes. (1 Base purpose is capable one hundredth of a share point).
Though the taxation price can increase with the implementation of GST,
however this transformation might bring down the compliance price
because the variety of taxes that are a part of the premium can merge
into one tax. As per the Model GST Law, Input reduction shall not be
out there always insurance, insurance once such services are used
primarily for private use or consumption of any workerAnalysis
The immediate impact are the rise in premiums, particularly for families that own

health, life and insurance policies.

With a hike in post-GST rates to eighteen from the present V-day, each the insurance

sector and also the banking sector are poised to urge costlier once Dominion Day. The

62
immediate impact are the rise in premiums, particularly for families that own health,

life and insurance policies.

GST & Insurance

Life Insurance & insurance

There are three sorts of life insurance:

# insurance plans — basic insurance policies

# ULIPs — insurance and investment beneath one integrated arrange

# Endowments (including money-back) — insurance policies that pay a payment on

maturity/death or a set sum monthly (like a pension)

Service tax applicable on every kind is completely different –

For example, Bharti Axa applies service tax at the subsequent rates:

Category Service Tax With SBC And KKC once GST

Term insurance premium V-day eighteen

ULIP charges V-day eighteen

Health insurance premium V-day eighteen

All these rates are replaced by eighteen which is able to lead to increase in premiums.

The value of offer of services in respect to insurance business shall be:

1. The gross premium minus the quantity allotted for investment, or savings on behalf

of the policy holder, if such quantity is hep to the customer.

For example,

Gross Premium one thousand 1000

Investment Portion 600 600

Life Insurance portion four hundred 400

Service tax @ V-day on four hundred sixty —–

63
GST @18% on four hundred —– seventy two

2. Single premium rente policies- 100% of the premium

3. All different cases- twenty fifth for first year and twelve.5% for second year ahead on

the premium charged

Gross Premium p.a. 1000

1st Year

25% valuable 250

GST @18% on 250 sixty two.50

2nd year

12.5% valuable one hundred twenty five

GST @18% on one hundred twenty five twenty two.50

4. If the whole premium is for all times insurance, GST @18% can apply on the whole

premium

Impact:

Both the prevailing and also the new policyholders can face increase within the

premium amounts because of increase in rates.

For insurers, the rise in taxes are passed on to the shoppers. The insurers expect higher

compliance and body prices because of the enhanced variety of GST returns and

conjointly impact of liability of inter-branch services.

General Insurance

General insurance includes insurance, marine insurance, insurance, felony insurance,

etc. The GST rate will be eighteen on general insurance.

Impact:

64
For policyholders, the final premium can rise as tax has enhanced from fifteen to

eighteen.

Corporate policyholders, WHO have taken general insurance, will fancy input decrease

on the GST paid on their policies (it was obtainable to them even beneath service tax).

Life and health insurers won't have input decrease because it isn't obtainable for all

times and health insurances (as they're for private purposes). Even company

policyholders with cluster life and insurance for his or her workers won't fancy any

input decrease.

Life insurance provided by government schemes are exempted from GST:

(a) Janashree Bima Yojana (JBY); or

(b) Aam Aadmi Bima Yojana (AABY);

(c) Life micro-insurance product as approved by the Insurance restrictive and

Development Authority, having most quantity of canopy of fifty thousand rupees;

(d) Varishtha Pension BimaYojana;

(e) Pradhan Mantri Jeevan Jyoti BimaYojana;

(f) Pradhan Mantri Jan Dhan Yogana;

(g) Pradhan Mantri Vaya Vandan Yojana; and

(h) the other insurance theme of the regime as could also be notified by Government of

Bharat on the advice of GSTC.

Life insurance provided by the Central Government to members of the military, Navy

and Air Force.

Place of offer for Insurance Services as Per Model GST Law

• Location of such registered person (i.e. client) for insurance services

65
• Location of the service recipient (who may be a non-registered person) on the records

of the provision of services.

From this, we are able to conclude that it'll be a decisive issue for the nondepository

financial institution to spot whether or not the recipient is registered or not.

Insurance trade is presently facing several challenges, tho' it's mature in 2016 however

compared to earlier years it has shown a decline. The Model GST Law has not outlined

any specific rate or any provisions associated with the insurance sector, the precise

position are determined solely once the arrival of the GST Act. thus allow us to see

however this can impact the Insurance trade within the close to future.

All policyholders can need to pay higher premiums on their insurance because of

increase in GST rates. a median family with life, health and insurance can realize a rise

of three in their insurance expenses. presumptuous they pay a complete of Rs

thirty,000 once a year on insurance excluding service tax, their expenses can increase

by three-d, i.e., Rs 900.

This means that if your insurance policy premium is Rs.10,000, then you may need to

deal a further Rs.300 post one Gregorian calendar month. Similar are the impact on

Unit coupled Insurance Plans because the GST goes up by three-d from V-day to

eighteen.

Traditional insurance savings plans or Endowment plans, that presently attract a

service tax of three.75% on the premium within the initial year of the policy, can

increase to four.5% within the initial year of the policy beneath the new tax regime.

Second year ahead, it'll rise to a pair of.25% from the present one.88% service tax

beneath the new GST act.

66
Car & 2 Wheeler premiums too can go up by three-d on first Gregorian calendar

month, 2017. If your renewal is due in next forty five days, obtain currently to avail the

lower rates. Click to match premiums for your automobile or for 2 wheeler currently.

If you were attending to obtain insurance for your family you ought to examine

shopping for the arrange before first Gregorian calendar month and save on your

premiums.

As per the rates declared by GST council, insurance sector can have eighteen per cent

as GST rate. varied nondepository financial institution officers aforesaid the speed hike

would be directly passed on to customers, therefore the purchasers would be the one

to pay extra tax.

This would mean, direct impact on the premium being paid by the policy holders.

During discussion, GST council had distinction in opinion for GST rates whether or not it

ought to be twelve-tone music or eighteen. on the other hand finally it had been set to

own a unified GST rate of eighteen across money sectors.

The premium paid by policy holder is predicated on the sort of policy they obtain.

policy are broadly speaking classified as Term arrange, Endowment arrange, ULIP,

insurance arrange, Motor insurance

Term Plan

Term plans strictly supply benefit and are termed as pure risk protection plans. In such

plans add assured is paid to the candidate, if insured dies throughout the term of the

policy.

The premium element of a term arrange contains the bulk of the chance element to

produce insured a risk cowl throughout the tenure of the policy. At present, service tax

of V-day is obligatory on the premium value of the term plans. As per rates declared

67
GST rates are eighteen. this implies the premium can get costlier by three nothing or

three hundred basis points.

Endowment arrange

Endowment plans or ancient insurance savings plans supply each death and maturity

advantages, whichever occur initial. Currently, endowment plans attract a service tax

of three.75 you choose the premium within the initial year of the policy and can rise to

four.5 you tired of the primary year beneath the new tax regime. As of now, 1.88 you

look after the service tax is levied on endowment plan's premium for the second year,

that is anticipated to rise to a pair of.25 to stand out from the second year ahead once

the implementation of GST.

ULIP

Unit coupled Insurance Plans (ULIPs) conjointly supply twin advantage of insurance and

investment. At present, service tax of three.5 which there's levied on protection a part

of ULIPs within the initial year and one.75 to stand out from second year ahead. this

might go up to four.5 you tired of the primary year and a pair of.25 to stand out from

second year ahead.

Health Insurance arrange

In current tax regime, health arrange premium attracts a service tax of V-day on its

premium value. With the introduction and implementation of the GST, the value of

buying the insurance can become costly because it will attract a tax of concerning

eighteen you choose premium from Gregorian calendar month 2017.

Motor Insurance

68
Motor premium conjointly attracts the service tax of V-day, which is able to rise to

eighteen to stand out from Gregorian calendar month 2017, if the speed is restored to

the present mere proportion mark.

Impact on apply of shopping for Insurance

But here the question arises that hike in tax ought to impact your call of shopping for

insurance or not. it's true that GST can create shopping for insurance very little costly,

however it's vital for a personal to secure his life, particularly once the individual is that

the sole bread-earner of the family. insurance plans, specifically insurance plans, are

the important insurance plans that cowl you and financially compensate your family in

your absence.

It is vital to appear at the sort of insurance arrange holistically, which incorporates its

advantages, inclusions, policy coverage, exclusions, policy term and its value

(premium).

Severe Competition Among Insurers

Also, with the rise in insurance premiums, there'll be a severe competition among the

insurers for giving the simplest insurance proposition to the buyer, which is able to be

apparently helpful for the buyer. Insurance premium, except as well as risk part,

conjointly includes expenses associated with policy issuing, negotiator commission, etc,

that might be down by the insurers to compensate the impact of sweetening of service

tax within the new GST era.

69
 CHAPTER-6

DATA ANALYSIS AND INTERPRETATION

70
 DATA ANALYSIS AND INTERPRETATION

Q.1. GST is beneficial or not for insurance sector?

(a) Yes (b) No

Yes No

0%

100%

Interpretation :

 20% respondents think GST is beneficial for insurance sector and

remaining 80% respondents not think as.

71
Q.2. Accountability impact.

(a) Yes (b) No

Yes No

25%

75%

Interpretation :

The graph shows that 25% respondents think that GST impact on accountability

and remaining 75% respondents not think as.

72
Q.3. Impact on documentation.

(a) Yes (b) No

Yes No

25%

75%

Interpretation :

 75% respondent believe that GST has impact and remaning 25% denied.

73
Q.4. Impact on taxes you paid before and after GST.

(a) Yes (b) No

Yes No

0%

100%

Interpretation :

 100% respondent believe that GST impact on taxes before and after GST.

74
Q.5. Changes in business policy.

(a) Yes (b) No

Yes No

5%

95%

Interpretation :

 Graph shows that 5% respondent believe that GST changes business policy

but 95% do not.

75
Q.6. Are you facing problem in dealing with customer?

(a) Yes (b) No

Yes No

5%

95%

Interpretation :

 Graph shows that 95% respondent believe that they face problem in dealing

with customers.

76
 Q.7. Do you feel any need for changing policies/plan?

(a) Yes (b) No

Yes No

35%

65%

Interpretation :

Graph shows that 65% respondents feel that policies should be changed while

35% respondents not in favour in changing policy.

77
Q.8. Has premiums for customer are increased?

(a) Yes (b) No

Yes No

0%

100%

Interpretation :

Graph shows that 100% respondents responded positive.

78
Q.9. Does it has affected the customer lose?

(a) Yes (b) No

Yes No

15%

85%

Interpretation :

85% respondents affirmed that it has affected the customer lose but remaining 15% not

believe so.

79
Q.10. commission of agents.

(a) Yes (b) No

Yes No

5%

95%

Interpretation :

graph shows that 95% respondents answered in positive and remaining 5% respondents

response was negative.

80
Q.11. Increased operational cost in legend of daily transaction, banking services etc.

(a) Yes (b) No

Yes No

35%

65%

Interpretation :

65% respondents in consonance with it while and remaining not agree with this cost.

81
Q.12. What do you think about the long term impact of GST on Bharti Axa

LifeInsurance?

(a) Good (b) Bad

Good Bad

35%

65%

Interpretation :

The above graph shows that 60% respondents think good and remaining 40%

respondents think bad.

82
 CHAPTER-8

SUGGESTIONS AND CONCLUSION

83
 Suggestions

 Insurance companies come up with customized plans making use of big data and

analytics in the coming days.

 State should relax the GST rate on insurance policy

 Provide relaxation for the government servant and old age people for the GST

 Documentation should be reduced and be easy.

 Create awareness in the rural and urban people regarding GST

84
Conclusion
Under GST regime in India, taxability on the gross premium for pure risk policies is
contrary to the principle of taxing the ‘value addition’
The Indian life insurance industry has come a long way indeed, especially in the last
decade. Back in the day, people viewed insurance primarily as a tax planning and
investment tool, something that people thought gave better returns while saving on pesky
taxes.
In a country like ours, where social security doesn’t exist and one cannot boast of viable
retirement schemes, seeking protection for the future becomes a compelling
preoccupation. And that is where buying insurance comes into play.
Post-liberalization, the insurance sector witnessed significant growth spurred by the
joining of private insurers, product innovation, and induction of multiple distribution
channels. This was further encouraged by the increase in the foreign direct investment
(FDI) limit, from 26% to 49%. Since then, insurance companies, along with the Insurance
Regulatory and Development Authority of India (Irdai), have been making concerted
efforts to develop the insurance sector in India.
As a result, we see a significant number of private players operating in the market today,
and a lot of product innovation catering to specific consumer needs.
In spite of all the progress in the sector, India continues to be a massively under-penetrated
market. We are the world’s second most populous nation, and yet we account for less than
1.5% of the world’s total insurance premiums and about 2% of the world’s life insurance
premiums.
According to a Swiss Re report, there is a big gap in insurance in Indian households. For
every $100 needed for protection, only $7.8 of saving and insurance is in place for a
typical Indian household, leaving a massive mortality protection gap of $92.2, says the
report.
Given the scenario, how will the goods and services tax (GST) impact the growth
momentum of this industry?
Of the four GST slabs—5%, 12%, 18%, 28%—insurance falls under the 18% slab, as
against the previous service tax of 15%. The increase in indirect taxation is contrary to the
positive measures that have been taken over the last few years to develop this sector.

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Governments across the world, even in the more mature markets, are known to make
conditions favourable for insurance protection. In many countries, life insurance is outside
the purview of GST.
In a few, cash flow system is followed for general insurance, e.g. in countries like
Australia, Singapore, and South Africa. For the latter, tax is charged on the premiums
received and credit is allowed for claims that are paid.
In the Asia-Pacific, where some countries account for the world’s highest insurance
penetration, GST and value-added tax (VAT) are not levied on insurance products.
Exceptions would be some cases in China, where policies of less than one year attract a
6% tax and Taiwan and the Philippines, where tax of 2-5% is charged outside GST
framework.
Even in the West, countries like Canada, and the European Union, do not tax life
insurance. This tells us that these governments understand the need for insurance
protection and encourage it by supportive policy.
Under the GST regime in India, taxability on the gross premium for pure risk policies is
contrary to the principle of taxing the “value addition”. GST is a tax on value addition and
net premium after deduction of claim is the net value addition. It is very difficult to
segregate the “savings” component and find a “value” that could be treated as the proper
base for tax, particularly for every premium transaction during the life-cycle of an
insurance policy.
We have witnessed impressive growth in this sector so far, but there needs to be a
sustained effort to retain the growth momentum. Imparting financial literacy, incentivizing
Indian households to transfer savings from physical assets to financial assets and taking
the distribution network to rural areas are expected to help bring more individuals under
the insurance blanket.
The coming years are critical as the policy and regulatory environment and consumer
response will govern the growth and stability of this industry.
Buying insurance will continue, provided insurance companies have the right kind of
solution-based selling approach and to that extent, a favourable indirect taxation structure
would have helped.
Insurance companies in India have strived hard to create financial awareness and increase
insurance penetration in the country. As the country strides into a new economic phase, we
hope that the industry gets the attention and support that it rightfully deserves.

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While further details should emerge in the near future, the Model GST Law may prompt
the companies in this sector to start examining the tax treatment of revenues and matrix for
centralized vs decentralized model, or even potentially adopting a hybrid model. Further,
the place of supply rules will play a critical role in the preparing of the sector towards
GST. The companies in this sector may have to initiate action steps to relook at the
operations, customer profiles, product mix, and the IT system’s ability to capture the
requisite details about the service recipient. The IT systems would need to be robust to
serve the intended purpose of adhering to compliances and achieve credit efficiency.
Overall, managing this change for the financial services and insurance industry will be
critical.

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LIMITATION OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from certain
limitations.
Some of these are mentioned here under so that the findings of the study may be
understood in a proper perspective.
The limitations of the study are:
 The study is based on the secondary data and the limitation of using secondary data
may affect the results.
 The secondary data was taken from the annual reports of the IRDA
 It may be possible that the data shown in the annual reports may be window
dressed which does not show the actual position of the company.
 Lack of time

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BIBLIOGRAPHY

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 BIBLIOGRAPHY

BOOKS CONSULTED:-
 C.R. Kothari “Research Methodology”, (2006), Wishwa Publication
 Human Resource management. A.K. Ashwathapa
 Robins -Organizational Behaviour by Prentices Hall of India.
 C.B.Gupta -Human Resources Management by Sultan & Sans.
 Mirza and saiyadain – Personnel Management By Prentice Hall of India
 Monappa -Industrial Relations
 C. R. Kothari Research Technology By Wishwa Prakaction
 S.S. Sasikala -Human Resource Management,
Journal
1. The Economic Times (2009) Featured Articles from The Economic Times.
2. Gst India (2015) Economy and Policy.
3. Mehra P (2015) Modi govt.’s model for GST may not result in significant growth
push. The Hindu.
4. Sardana M (2005) Evolution Of E‐Commerce In India Part 3.
5. TRAI (2015) Highlights of Telecom Subscription Data as on 28th February.
6. Patrick M (2015) Goods and Service Tax: Push for Growth. Centre for Public
Policy Research (CPPR).
7. SKP (2014) GST: Impact on the Telecommunications Sector in India.
WEB SITES VISITED: -
 www.Bharti Axa Lifeinsurance.co.in
 www.iciciprulife.com
 www.einsuranceprofessional.com
 www.bimaonline.com
 www.ciionline.org
 www.mindbranch.com
 www.irdaindia.com

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ANNEXURE

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 QUESTIONNAIRE
Q.1. GST is beneficial or not for insurance sector?
(a) Yes (b) No
Q.2. Impact on accountability.
(a) Yes (b) No
Q.3. Impact on documentation.
(a) Yes (b) No
Q.4. Impact on taxes you paid before and after GST.
(a) Yes (b) No
Q.5. Change in business policy.
(a) Yes (b) No
Q.6. Are you facing problem in dealing with customer?
(a) Yes (b) No
Q.7. Do you feel any need for changing policies/plan?
(a) Yes (b) No
Q.8. Has premiums for customer are increased?
(a) Yes (b) No
Q.9. Does it has affected the customer lose?
(a) Yes (b) No
Q.10. Agents commission.
(a) Yes (b) No
Q.11. Increased operational cost in legend of daily transaction, banking services etc.
(a) Yes (b) No
Q.12. What do you think about the long term impact of GST on Bharti Axa
LifeInsurance?
(a) Good (b) Bad

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