Raise in tax rates will not impact consumption

Must Read

President Ram Nath Kovind appoints new governor for Kerala, Telangana, Himachal Pradesh and Maharashtra

President Ram Nath Kovind appointed new governors for Maharashtra, Kerala, Telangana, Rajasthan, and Himachal Pradesh on Sunday. https://twitter.com/ANI/status/1168037199767457792 Former Union Minister Kalraj...

NRC list for Assam released; Fear looms as 19 lakh people face exclusion

NRC (National Register of Citizens) for Assam has been published at 10 am today. The final list excludes over...

Lateral Entry Era Begins as Union govt. appoints 9 professionals to Joint Secretary posts

The government has appointed its first batch of private professionals to the post of Joint Secretary in various ministries....

With Goods and services tax coming into practice from 1 July, people are fearing higher GST rates will impact the consumption rates negatively. But according to the economists and industry experts, there is nothing to fear, as higher tax rates will not have any impact on consumption. Interest in buying products or services may remain unaffected with rise in tax rates, they added.

The service tax on financial services and telecom has been increased to 18% from 15%, by the GST Council. But according to a recent data in insurance, consumers seem to take the increase in tax rates at their own pace. Whenever the government has increased the tax rates or levied a cess to gather funds for its welfare projects, the sales did not hamper much.

Chief Econimist of Aditya Birla Group, Ajit Ranade said that, some financial products are less elastic in nature and at an individual level insurance is not very price sensitive.

In June 2015, when the service tax on risk premiums was raised to 14% from 12.36%, income from sales of new policies went up by 13.8%. For that financial year industry’s new business income rose to 22.55%. Another example in higher sales after increase in tax rates is the Krishi Kalyan. It took its service tax levels to 15% and in the same month income from sales of new policies rose to 29% and had a growth of 26.13% in that financial year.

V Manickam, Secretary General of Life Insurance Council also confirmed that, it did not impact insurance sales, when in the past tax rates were increased.

As per the current tax rates, service tax of 3.5% is levied on the protection part of endowment and unit-linked life insurance policies in the first year, followed by 1.75% for the second year onward. These prices will now go up to 4.5% in the first year and 2.25% from second year onward.

 

 

- Advertisement -

Latest News

R&D centre for clean coal unveiled in Bengaluru

Bengaluru, Sep 16 (IANS) Union Minister of Science and Technology Harsh Vardhan on Monday opened the national centre for...

RBI expands BBPS coverage to all categories

Mumbai, Sep 16 (IANS) The Reserve Bank of India on Monday expanded the Bharat Bill Payment System coverage to included all categories of billers,...

Wanted criminal held in Narela murder case

New Delhi, Sep 16 (IANS) With the arrest of 25-year-old history-sheeter, the Delhi Police claimed to have solved the Virender Maan murder case, who...

GM, TCS launch partnership for global vehicle engineering

New Delhi, Sep 16 (IANS) Automobile manufacturer General Motors and IT major Tata Consultancy Services on Monday entered into a partnership for future global...

Italy resuming a central role in Europe: EU Commissioner

Rome, Sep 16 (IANS/AKI) With its new left-leaning government, Italy, a founder member of the European Union, and the eurozone's third largest economy, is...
- Advertisement -

More Articles Like This