Insurance make against any item and later get insurance claim received
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24 March 2026
Insurance Make For any items and later on received compensation against insurance made, How to calculate GST Input claimed against Insurance made because of Compensation Received. suppose
Insurance Made of Rs. 1,00,000 and GST on Insurance Rs. 18,000 Now total amount Rs. 1,18,000 Later on Received Rs. 70,000 Received from Insurance company My question is that what is income and How much GST Input to be reversed. Please reply.
Insurance Made of Rs. 1,00,000 and GST on Insurance Rs. 18,000 Now total amount Rs. 1,18,000 Later on Received Rs. 70,000 Received from Insurance company My question is that what is income and How much GST Input to be reversed. Please reply.
24 March 2026
Insurance proceeds (claim amount) received for loss/damage of goods or assets are not a taxable supply → no GST is payable on the ₹70,000.
The ₹30,000 shortfall (₹1 LAKH – ₹70,000) is typically treated as business loss / under‑insurance in accounts, not as GST‑taxable income.
The ₹30,000 shortfall (₹1 LAKH – ₹70,000) is typically treated as business loss / under‑insurance in accounts, not as GST‑taxable income.
24 March 2026
ITC on insurance premium can be claimed only if:
The insurance is for business‑use assets/goods, not for personal use, health, etc.
The policy is taken for taxable business activity.
In your case:
Suppose you claimed ₹18,000 ITC on the insurance premium for a business‑use asset.
Later, the insurance company paid only ₹70,000 against a ₹1,00,000 insured value → there is under‑insurance of ₹30,000.
The insurance is for business‑use assets/goods, not for personal use, health, etc.
The policy is taken for taxable business activity.
In your case:
Suppose you claimed ₹18,000 ITC on the insurance premium for a business‑use asset.
Later, the insurance company paid only ₹70,000 against a ₹1,00,000 insured value → there is under‑insurance of ₹30,000.
24 March 2026
There are two different reversals you may need to consider:
a) ITC on the under‑insurance portion of the asset
When the asset is destroyed/lost and ITC on that asset is blocked under section 17(5)(h) (goods lost/destroyed), you must reverse the ITC attributable to the lost part of the asset, even if you get a claim.
If the total cost of the asset before loss was ₹1,00,000 and you had taken full ITC on it, then the entire ITC on the asset is reversed when it is written off as destroyed.
The insurance claim of ₹70,000 simply reduces your business loss; it does not create a GST liability or require ITC reversal on the insurance premium itself, unless the insurance is for personal or exempt use.
a) ITC on the under‑insurance portion of the asset
When the asset is destroyed/lost and ITC on that asset is blocked under section 17(5)(h) (goods lost/destroyed), you must reverse the ITC attributable to the lost part of the asset, even if you get a claim.
If the total cost of the asset before loss was ₹1,00,000 and you had taken full ITC on it, then the entire ITC on the asset is reversed when it is written off as destroyed.
The insurance claim of ₹70,000 simply reduces your business loss; it does not create a GST liability or require ITC reversal on the insurance premium itself, unless the insurance is for personal or exempt use.
24 March 2026
Therefore, in your case there is usually no GST reversal just because the insurance paid only ₹70,000 instead of ₹1,00,000; the key is eligibility of ITC on:
the asset (reversed if blocked under 17(5)), and
the insurance premium (reversed only if used for exempt/personal purposes).
the asset (reversed if blocked under 17(5)), and
the insurance premium (reversed only if used for exempt/personal purposes).
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