27 Jun General Insurance Sector Gets Rs 18,000 Crore GST Relief: Key Details
The general insurance sector has received a significant relief ahead of the Union Budget, amounting to over Rs 18,000 crore, as the GST Council has waived previous tax demands imposed on insurers. The GST Council’s decision, which was finalized in a meeting on June 22, addressed demands related to co-insurance, reinsurance commissions, and the taxation of reinsurance on crop schemes.
According to the General Insurance Council (GI Council), the apex body representing general insurance companies in India, these reliefs were granted following extensive industry consultations and engagements with tax authorities. The Council argued that GST demands on co-insurance and reinsurance commissions lacked a legal basis and highlighted potential adverse impacts of taxing reinsurance on crop insurance schemes.
Key outcomes include:
- The declaration that transactions between insurers in co-insurance arrangements and reinsurance commissions are classified as "no supply" under GST law, thereby exempting them from GST payments.
- Resolution of past GST liabilities on reinsurance premiums for government crop schemes, exempting premiums paid between July 1, 2017, and January 23, 2018.
This decision is seen as a major relief for the general insurance sector, ensuring that intended insurance benefits are delivered without additional tax burdens. Industry leaders have also advocated for a reduction in GST rates on individual health insurance policies to promote wider access to health coverage as part of social security measures.
Source: Indian Express
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