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Buying a vehicle is not complete without insurance. Whether it’s for your personal car or a fleet of commercial vehicles, insurance premiums now include Goods and Services Tax (GST). This blog breaks down the gst on vehicle insurance, how it’s calculated, and what it means for your expenses.
As per the GST rules in India, insurance services fall under the 18% GST slab. So when you pay your vehicle insurance premium—be it third-party or comprehensive—you also pay 18% GST on it.
| Type of Insurance | GST Rate |
|---|---|
| Third-party motor insurance | 18% |
| Comprehensive vehicle insurance | 18% |
| Commercial vehicle insurance | 18% |
| Add-on covers (engine, tyre, etc.) | 18% |
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So, when buying or renewing your car or bike insurance, the gst on motor vehicle insurance premium adds a significant amount to the final bill.
The gst on commercial vehicle insurance also stands at 18%, similar to private vehicles. This includes:
However, the key difference is that business owners can claim Input Tax Credit (ITC) on this GST, provided:
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| Scenario | Can Claim ITC? |
|---|---|
| Private car insurance | No ❌ |
| Commercial vehicle for business use | Yes ✅ |
| Insurance for fleet/cab operators | Yes ✅ |
| Insurance for employee vehicles | No ❌ |
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Understanding the gst on vehicle insurance helps you manage your premium payments better and make informed decisions—especially if you’re a business that can benefit from Input Tax Credit.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.