Regularization of GST on Co-Insurance Premium Apportionment and Reinsurance Commission
CBIC has issued the circular for Regularization of GST on Co-Insurance Premium Apportionment and Reinsurance Commission.The clarification issued based on the 53rd GST Council meeting held on 22-06-2024 provides guidance on the tax treatment on certain insurance related transactions that have been retrospectively added in scheduled III of the CGST Act,2017.
Two specific activities classified under Schedule III of CGST Act, they are neither treated as supply of goods or services.
Co Insurance Premium apportionment : when lead insurer apportioned the premium to co insurer in co insurance arrangement, it will not subject to GST, provided that the lead insurer has already paid GST on the full premium collected from the insured.
Ceding/reinsurance commission: The commission deducted by the reinsurer from reinsurance premium paid by an insurer will not be taxed separetly as long as reinsurer pays GST on the gross reinsurance premium, which includes ceding commission.
This changes were enacted through Finance No.2 Act,2024 and brought in to effect from 01-11-2024 via Notification No 17/2024-CT dated 27-09-2024.
The GST Council recommended regularization of the GST on the above transactions for the period from 01-07-2017 to 31-10-2024. As is where is basis means whatever GST was already paid earlier will not be refunded, adjusted or disturbed. If GST was not paid on such transactions there will be no demand or penalty for the past period.
