The 47th Good and Service Tax (GST) Council, chaired by Union Finance Minister Nirmala Seetharaman, clarified that there is no GST for the No claim Bonus (NCB) offered by the Insurance Companies. The council clarified that the NCB offered is an admissible deduction for valuation of insurance services.
NCB is a reward given by an insurance company to an insured for not raising any claim requests during a policy year. The NCB is a discount ranging between 20%-50% and is given to the insured while renewing a policy.
The policyholder receives a 20 percent bonus if they do not file any claims in the first year of their insurance. The NCB is increased to 25% if the policyholder does not file a claim for two consecutive years.
The GST council made certain clarifications in the meeting rather than including many other new areas. One of the clarifications made by the Revenue Secretary, Sanjay Malhotra is that there will be no GST charged against the NCB offered by the insurance companies.
The meeting was also attended by Union Minister of State for Finance Pankaj Choudhary besides Finance Ministers of States & Union Territories (with legislature) and senior officers of the Ministry of Finance & States/ Union Territories.
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