As announced during Budget 2024, the government is set to increase the service tax from the 6% rate at present to 8% as of March 1. There are a few categories that are excluded from the new rate, including F&B and telecommunications, but in general, consumers are set to pay more as a result of the hike.
It has already been indicated that vehicle servicing and repairs do not fall under exempted categories under the revision, and so vehicle maintenance is set to cost more from March 1. Bear in mind that the service tax in this case is only applied to labour charges and not on the parts themselves.
In any case, the fun doesn’t really end there, because another area where motorists are set to pay more is motor insurance. Nothing has really been highlighted about this in the news so far, but the segment will definitely see the 2% increase being applied on it, as all business-to-consumer general insurance or takaful, excluding medical insurance or medical takaful is subject to service tax.
Will it cost you significantly more? Well, not quite, although it depends on the coverage or rather how much you actually have to fork out for the premium itself. The service tax for motor insurance is charged on the actual premium paid, which means it is calculated on the sum after NCD, if any, is applied.
Taking the resident Honda CR-V’s 2023 insured sum of RM96,200 as an example, the service tax is RM102.84 on a premium costing RM1,713.97 (after applying 55% NCD). That’s at 6%, and if you apply an 8% rate on the premium to get a gauge of how things shape up, the service tax would be RM137.12, which is an extra RM34.27.
Another example is provided by Hafriz’s Range Rover Sport, for which he presently pays RM5,997 (with 38.33% NCD applied) in insurance. The service tax for that is RM359.82, and this would increase to RM479.77 if calculated with an 8% rate, translating to an additional RM119.95.
As it is with servicing costs, the margin of increase from a standalone viewpoint isn’t drastic (unless labour charges are exorbitant and the vehicle you’re insuring is well, expensive), but like with the increase in the electricity tariff for consumers who use between 601 kWh and 1,500 kWh a month, it represents additional, unavoidable spend, and it will add up.
Regarding the application of the new service tax rate, here’s an interesting bit – consumers may actually have to pay more for their existing motor insurance if coverage runs through March 1, if that in an FAQ by Zurich Malaysia is right.
The FAQ notes that the tax will be applied partially on existing policies, where a policy with a coverage period from July 2023 to June 2024 will see the duration of coverage from March 1 to the end of the coverage period in June being subject to the service tax increase.
It is not known whether it is blanket across all providers, but it it looking likely to be the case, as an MSIG post on its Facebook page notes the increase in the service tax as well as the following observation:
“MSIG reserves the right to collect any undercharged service tax for policies processed before 1 March 2024 where the insurance period spans across 1 March 2024. You are obligated to pay any applicable taxes including but not limited to service tax and stamp duty that are imposed by the Malaysian tax authorities in relation to your policy.”
Should this be the case, the question would be, while the calculation will be pro-rated, how exactly will policy holders pay for the adjustment? We have reached out to PIAM to find out more about this, and will update when we get further information.
Looking to sell your car? Sell it with Carro.
Planned taxation not well thought out. Still many questions to answer. That is not a good governance. At least, exempt all and slowly expand coverage.
Some claimed 35million Msian cannot be wrong but those who voted PH & PN made the biggest mistake of their lives.
Rakyat must pay more and more starting 1st March 2024… Yaky yakk yeayy… Yakk yakk yeayy
Aren’t we glad our neighbour kicked us out? Look at them now. Laughing stock
Kerajaan Madani = Kerajaan Mahal Dah ni
Klu tak cukai mana nak dapat pendapatan lagi? Nasib la dpt blk sakau2 tu contoh drp Daim dan Tun-Tun dan 1MDB. Bantuan nak macam2, cukai tak nak bayar.
Dari GST yg dihapuskan bang, GST 6% tu yang cuba dilaksanakan tp dibatalkan pada tahun 2018, ingat jgn buat2 lupa. Dlm anggaran rm30,000,000,000 kehilangan setiap tahun, darab 5 tahun ,sudah rm150,000,000,000 (1mbd sekangkang kera je) cukai syarikat gelap kehilangan pungutan. X dpt cukai perniagaan biar kita cukai rakyat, begitu lah konsep Mahal Dah Ni. Sekurangnya telus gitu, at least abang dh tau kena bayar cukai lebih tahun ni, dan sedar akan cukai tu. Maaf tp nasi dah jadi bubur. Pasni boleh minta majikan naikkan gaji untuk beli Maserati satu bang.
We have to start somewhere. Enough of being reliant on the G for everything. Pay your part and revive the country. Catch the BIG fish and refill the G coffers is another step that yet G has to constantly pursue.
Jgn jeles la gomen tak jaga korang T20. Gomen rely on us to keep producing their fixed deposit voters. We don’t have time to work & earn a decent living. We spend all our time in bed to procreate so gomen have to tongkat us for life
A PH Gomen is a Path to Hell
ridiculous bad enough we are forced to buy insurance now it’s even more taxing
Actually u don’t need insurans & rotek. U can save more by paying saman on the spot. 100 setel. Did u watch my video?
Wait you accidentally knock and paralsye a professional or lay person you maybe sue for millions.
buy inso still can get sued, kena bang by another car with no inso you cant claim anything. kena bang my motor you cant claim anything. say taknak to conjob motor inso
Ironically, the ones paying yearly and not a single claim are the good drivers.
Anwar menang rakyat senang
Madani madanon
Live goes on, bruh
La la how the life goes on
What is the stupid arguement. Im not buying insurance on monthly basis. if monthly basis yes u can charge extra after 1st march.Is like saying i already paid my roadtax for eg rm100. Then next month roadtax increase rm50. Now what, i need to go JPJ and prorate give extra money. Brainless greedy people with collapsing business. Why not make it simple any transaction before 1st march 6%, after that is 8%.
Whilst …continuing the STUPID Petrol and Diesel costing RAKYAT ( Rich Corp and rakayt ,,,Thks VERY Much !!! ) ..Rm ~50 Billion per year , the Govn decides to TAX all RAKYAT even those struggling to make ends met. Govn…Needs to “Understand their priorities”. Else…Out goes PH.
To counter this, the gov should force increase max NCD to 70%
I thought the current government’s manifesto would reduce car prices. now increase the car price. WTH… are we stupid to vote for all this clown?
No matter what you say, the clown is actually everyone who voted. Right back at you
yay! any malaysians that enjoy salary increment this year will be use to pay taxes.
Wait you accidentally knock and paralsye a professional or lay person you maybe sue for millions.
KLCI 12 months HIGH
35 millions cant be WRONG, only B40 is wrong and remains POOR
Stupid analogy, look at the inflation is also 12 months HIGH. You think all rakyat main bursa and getting richer?
The reason why it is high because this Gomen now allow short selling stocks and sharks been goreng the stock market. Wait until they massive pull out from market to gain profit then you will see KLCI 24 months LOW. Then 35millions need to suffer for the wrongs of a few million.
How can a 2023 Honda CRV have a insured sum Of only RM 96200
Aku beli kete cash. Suka hati aku la nak insure minimum. Korang yg beli kete hutang bank tu padan muka bayar premium mahal hahahaha
Kereta mahal boleh beli tak kan insurance naik sikit sudah bising.Yg risaunya cukai naik tetapi ia tidak semua cukai yg kita bayar masuk poket kerajaan tetapi masuk poket service provider.