Can GST applicable on insurance claim received

No GST on insurance claim received. Here is why.

An insurance claim settlement is not a consideration for a supply of goods or services. It is a payment of indemnity by the insurer to restore the insured to their pre-loss position. Under Section 7 of the CGST Act, a supply must involve consideration for a taxable transaction.

So when your business receives Rs 5 lakh from the insurer for a fire or flood loss, that Rs 5 lakh is:
- Not income from supply of goods or services
- Not subject to GST on receipt
- Included in your total income for income tax purposes (whether or not it is taxable under IT depends on whether it covers capital or revenue loss)

Where GST does apply in insurance:
- The premium you pay to the insurer attracts GST at 18% for most general insurance policies (fire, marine, motor)
- Health and life insurance premiums attract GST at 18% (with ITC restrictions on the recipient side)
- ITC on insurance premiums: blocked under Section 17(5) for most business expenses, but available for factory and machinery insurance in manufacturing

For the full GST rate breakdown on different insurance types, see this [GST on insurance premiums guide](https://taxgarden.in/blog/gst-on-insurance-premiums-india-2026-life-health-motor-rates-guide).