S.Tax on Insurance premium paid by Dealer on behalf of us?
This query is : Resolved
Ramdinesh G
(Querist)
11 May 2010
Will there be any Service Tax component on Insurance premium paid to Insurance Co. by a Motor Car Dealer on behalf of us?
Aditya Maheshwari
(Expert)
11 May 2010
The service tax component in the insurance premium will be paid by the dealer to the insurance co and will be reimbursed by you. No double service tax.
Ramdinesh G
(Querist)
12 May 2010
Will we be able to take S.Tax Input credit?
22 July 2025
This is a good practical query. Let's break it down:
🔹 Scenario:
A motor car dealer pays insurance premium on your behalf to the insurance company (as part of vehicle purchase).
That premium includes service tax (pre-GST era).
You reimburse the dealer for the insurance premium.
🔸 Q: Is there service tax on this reimbursement?
✅ No double service tax applies.
The insurance company charges service tax on the premium.
The dealer just collects and remits this amount — it's a pass-through.
No separate service tax is payable on the reimbursement to the dealer.
🔸 Q: Can you take Input Credit of Service Tax on Insurance Premium?
✅ Yes, but with conditions:
You can claim CENVAT credit of service tax on the insurance premium if:
The invoice is in your name, and
The insurance is for business assets or purposes, not personal use, and
The premium has service tax separately shown, and
You are registered under service tax or excise laws (pre-GST), and eligible to take CENVAT credit.
⚠️ If Insurance is for Personal Use (e.g., car for director):
🚫 No CENVAT credit is allowed — as it's not in the course or furtherance of business.
💡 Practical Tip:
Ask the dealer to provide a copy of the insurance policy showing:
Your name
Premium amount
Service tax charged by insurance company
This becomes your support for claiming input credit.
🔹 Scenario:
A motor car dealer pays insurance premium on your behalf to the insurance company (as part of vehicle purchase).
That premium includes service tax (pre-GST era).
You reimburse the dealer for the insurance premium.
🔸 Q: Is there service tax on this reimbursement?
✅ No double service tax applies.
The insurance company charges service tax on the premium.
The dealer just collects and remits this amount — it's a pass-through.
No separate service tax is payable on the reimbursement to the dealer.
🔸 Q: Can you take Input Credit of Service Tax on Insurance Premium?
✅ Yes, but with conditions:
You can claim CENVAT credit of service tax on the insurance premium if:
The invoice is in your name, and
The insurance is for business assets or purposes, not personal use, and
The premium has service tax separately shown, and
You are registered under service tax or excise laws (pre-GST), and eligible to take CENVAT credit.
⚠️ If Insurance is for Personal Use (e.g., car for director):
🚫 No CENVAT credit is allowed — as it's not in the course or furtherance of business.
💡 Practical Tip:
Ask the dealer to provide a copy of the insurance policy showing:
Your name
Premium amount
Service tax charged by insurance company
This becomes your support for claiming input credit.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- WRONG GSTR7 ENTRIES ACCEPTED ERRONEOUSLY
- Tax on Amount transferred in HUF Account
- Nursery business
- GST input credit on commercial property
- GST REFUND ISSUE ON PURCHASE OF PLANT AND MACHINERY
- Working on Gold wastage during Melting of old gold jewellery
- TDS on Dashcam rent and allied services
- ETDS return q4 25-26
- Royalty payments to the Mining Department for procurement of murum - GST input
- Capital gains in IT returns
- Subject: Legal Remedy for Removal of Income Tax Demand for AY 2024–25 – Charitable Trust
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
