In a major relief to insurance companies in India, the GST council has recommended significant measures, proposing that the co-insurance premium apportioned by the lead insurer to the co-insurer be declared as “no-supply,” and that past cases be regularized on an “as is where is” basis, thus providing substantial relief to the insurance sector.
Sources added that over 100 notices sent by the Directorate General of GST Intelligence ( DGGI ) to insurance companies across the country are now null and void, as the GST council has acknowledged their representations and clarified in favor of the industry regarding co-insurance, reinsurance, wreck, and salvage.”
The insurance sector had been facing DGGI notices since November 2022, dealing with GST demands for non-payment of Goods and Services Tax ( GST ), particularly related to co-insurance agreements, reinsurance commissions, and the reinsurance of crop schemes
DGGI sent notices to insurance companies claiming unpaid taxes, resulting in substantial financial burdens with demands exceeding ₹20,000 crores. In response, insurance companies appealed to North Block and IDRAI, among others, for urgent relief.
Their representation was subsequently reviewed by the law and fitment committees under the GST council’s framework. Based on these recommendations, the proposal was cleared by the 53rd GST council meeting held on June 22 in New Delhi. The government has recently issued notifications clarifying these matters.
GST authorities had been demanding GST on the portion of the premium shared with co-insurers, treating it as consideration for a service, while also demanding GST on the reinsurance commission, considering it as the insurer’s income.
The Bombay High Court issued notices in response to 22 writ petitions filed by major insurance industry players, challenging the GST levy on co-insurance policies.
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