Union Finance Minister Arun Jaitley said the final slabs would depend on the source of funds meant to compensate states for revenue losses.
The Goods and Services Tax Council ended its three-day meeting a day ahead of schedule on Wednesday after states failed to reach a consensus on the rate bands for the new regime, The Hindureported. The Council will now discuss the rate structure in its next meetings on November 3 and 4.
The states also reportedly failed to come to an agreement on the Centre’s proposal to impose a cess over the GST on luxury items. Revenue Secretary Hasmukh Adhia said the states were of the opinion that it was not possible to segregate goods and services. He said, “For instance, restaurants register for both service tax and Value Added Tax [which is imposed exclusively on goods].”
Meanwhile, Union Finance Minister Arun Jaitley said the final tax slabs would depend on the source of funds that the Centre intends to use to compensate states for revenue losses incurred after the shift to the GST regime, NDTV reported. Jaitley said that while all the members of the Council had “converged towards a consensus”, the details would be worked out during the Council’s next meetings.
On Tuesday, the Council discussed a four-slab rate band structure with the lowest rate of 6% to be imposed on essential items, and the highest rate of 26% for luxury goods and demerit items such as tobacco, cigarettes, aerated drinks, and polluting items. It also discussed standard rates of 12% and 18%. It further proposed the exemption of food items and 50% of commonly used items from the purview of the GST.
Adhia had said that less than 10% of the taxable goods would fall in the lowest rate bracket, while 70% of the taxable base would come in the lower and standard rate brackets. About 25% of the tax base would fall in the highest rate bracket, he had said, adding that fast-moving consumer goods and consumer durable products would attract 26% GST rate, against the current 31%.
The GST Bill got President Pranab Mukherjee’s approval on September 8, after being ratified by 16 states. It was passed by the Rajya Sabha on August 3.
45% consumers purchase financial products online according to our survey. Here’s why
How one of the last bastions of offline transactions is rapidly moving online.
With flight bookings, shopping and buying movie tickets all moving online, it was only a matter of time before purchasing financial products followed suit. In fact, with greater safety, better user interfaces, simpler processes and of course, busier lives, many Indians are opting to buy financial products like insurance and bank deposits online and on-the-go rather than at a bank branch.
We conducted a survey among 150 consumers in 4 metro cities (Mumbai, New Delhi, Bangalore and Ahmedabad) and 2 tier-II cities (Indore and Bhopal) to understand the financial products Indians are buying online and their needs.
The market for financial products still has huge potential for growth with 29% respondents reporting that they owned no financial instruments. Insurance is without a doubt the most widely owned financial instrument for Indians. Nearly half the sample—45% of the respondents—reported investing in insurance. Apart from that, around 27% invested in bank deposits like Fixed and Recurring Deposits and only 13% opted for mutual funds, 13% bought stocks, and just 10% took home loans. While many people still consume financial products only at their bank branches, a large number have started seeking financial information and buying financial instruments online.
The shifting tide
We found that 45% of the survey respondents bought financial products online, indicating that a large chunk of Indians is trusting the internet to manage something as sensitive as their financial investments. It is clear that Indians value the distinct advantages of transacting online. Convenience is an integral part of the experience—60% of those who bought financial products online felt that convenience played an important role in choosing to purchase online. Multiple aspects of convenience resonate with buyers—over 40% felt that the availability of 24/7 services and the ease of comparing different products from drove them to buy online.
However, findings also reveal some concerns that even tech-savvy Indians have with the online medium.
Security is king
Understandably, security is a key factor for buyers of financial products. Even among the 45% who purchased financial products online, almost half felt that the lack of security prevented them from buying more financial products online. Tellingly, the most commonly bought financial product online is general insurance. It has to be bought (in the case of travel) or renewed (in the case of car insurance) regularly and quickly, which is easier done online. It also doesn’t require the submission of too many personal documents—another factor reported by many as a barrier to online purchase of financial products.
To overcome these security concerns, many companies are taking concrete steps to improve the online security of their portals. They are setting up SSL security systems that encrypt and protect the user’s data and payments and are educating customers on how to recognize online payment scams. Thus, people are slowly moving towards buying high involvement financial items like life insurance as well online.
The human factor
Research is a crucial part of the buying process, and most buyers seek information from multiple sources. While research for several consumer products like electronics and furniture has moved online even if purchase is offline, financial products have been slower to move, especially due to the need for expertise. From the sample, 55% rated talking to financial consultants and advisors as very important. Similarly, 55% rated advice from friends and family as very important.
As is evident, while the world is going online, there is something to be said for the familiarity and comfort of human interaction. Even online buyers value non-digital channels of communication. Of those who bought financial products online, 25% felt that visiting bank branches was important, 30% felt that recommendations from friends and family was important, and 33% felt that discussing it with financial advisors was important.
However, we find that online forums and aggregators are also gaining in terms of people using them to research products. According to a BCG report, search queries on life and health insurance have grown 4.5 times from 2008 to 2013, showing that digital is certainly influencing the research part of the buying cycle. Many life insurance companies and banks have caught on to this trend and are finding ways of making customer service executives available online through chat facilities on their portals. Additionally, companies are also investing in a better online user experience by designing their websites to be simple, attractive and easy-to-understand, so that the process of purchase becomes easier for customers.
When it comes to buying insurance, finding an appropriate plan is not an easy process. Life insurance companies are using technology and algorithms to overcome these human biases with innovative products like life insurance calculators. An example of this is the HDFC Life insurance profiler which simplifies the process of choosing an insurance plan. A person can enter five to six parameters and get an objective opinion on the best insurance plan suited to his or her time and status in life.
HDFC Life Insurance has also taken detailed note of its customers’ requirements as they move towards the digital age. Its product website has been designed to ensure consumers feel secure and well attended to when transacting online. All payment gateways have SSL security and are ISO 27001 certified to ensure optimum security. Additionally, to facilitate easy query resolution, it offers an online chat function along with co-browsing where a user can give control of her or her system to the chat executive so that details can be filled in for them. To solve for the barrier of document submission, HDFC Life even allows users to submit documents through e-mail or upload files on Google drive in place of hard copies. Easy e-KYC facilities allow for the Aadhar card and address proof to be uploaded online to quickly verify identity. To find the right insurance plan for yourself and experience the innovative services that the organization has to proffer head to their insurance profiler to start your journey towards buying a life insurance plan.
This article was produced by the Scroll marketing team on behalf of HDFC Life and not by the Scroll editorial team.