While the GST has been removed for health insurance and life insurance policy—no such luck for motorcyclists and scooter enthusiasts.

Your two-wheeler insurance premium continues to be taxed at the 18% GST rate, the same rate that has been in place since 2017. 

So, yes, insurance will still affect the price of your bike despite a GST cut, but the overall effect will vary depending on the type of insurance you choose.

Your insurance premium is determined by several factors beyond just the bike’s retail price. 

Here is how the GST changes interact with bike insurance costs:

Comprehensive insurance

• Insured Declared Value (IDV): The premium for a comprehensive policy is directly linked to your bike’s market value, or Insured Declared Value (IDV). A GST cut on smaller bikes (under 350cc) lowers the ex-showroom price, which, in turn, reduces the IDV and makes your comprehensive insurance premium cheaper.
• Add-on covers: Extras like a zero-depreciation cover will increase your premium. Even with a GST cut on the bike, these add-ons, which are a part of the insurance service, still have an 18% GST applied to them. 

Third-party insurance

• Regulated premiums: The premiums for third-party insurance, which is mandatory in India, are not tied to the bike’s market value. Instead, they are fixed by the IRDAI (Insurance Regulatory and Development Authority of India) based on the bike’s engine capacity (cc).
• No change from GST cut: As a result, the GST cut on the vehicle will not affect the cost of your mandatory third-party insurance, which will still have an 18% GST on the premium itself. 

Other factors affecting your premium

Beyond the bike’s price and IDV, other variables continue to influence your insurance cost:

• Engine capacity (cc): Higher engine capacity leads to a higher risk, which means a higher premium for both comprehensive and third-party plans.
• Geographic location: Premiums are typically higher in major cities due to higher traffic density and risk of accidents or theft.
• No-Claim Bonus (NCB): You can earn a discount on your own-damage premium for every year you do not make a claim.
• Rider profile: Your age and riding experience can also impact your premium, as insurers view older, more experienced riders as lower risk.
• Electric bikes: Electric bikes already receive a much lower GST of 5%, making both the vehicle and the overall insurance cost significantly more affordable.

Apart from these aspects of purchase, you may want to look at how much you are paying as EMI on any loans to purchase your two-wheeler. Refer our related article for the same.

Write to us by email to GET@Budvice.com to get quotations best suited for your needs.